How the 2024 Autumn Budget Impacts Landlords: Key Takeaways and Future Considerations
The 2024 Autumn Budget has delivered both stability and new challenges for landlords across the UK. This year’s budget spared landlords from the hotly anticipated Capital Gains Tax (CGT) increase, a relief for those concerned about selling costs. However, the budget introduced a higher Stamp Duty surcharge for additional properties and placed a greater emphasis on energy efficiency upgrades through grants and tax reliefs.
To help landlords in London understand and navigate these changes, Your Home Managed explores the main takeaways from the budget that landlords need to know - and what steps to take next.
1. Capital Gains Tax (CGT) on BTL Property Sales Stays the Same
There had been considerable speculation that CGT on property sales might align with income tax rates, potentially pushing it as high as 45% for top-rate taxpayers. Instead, the Chancellor, Rachel Reeves, chose to increase current CGT rates to 18% for basic-rate taxpayers and 24% for higher-rate taxpayers. With capital gains tax remaining unaltered on the sale of buy-to-let properties and second homes, this decision allows landlords to avoid a steep tax increase when selling a property, reducing pressure to exit the market and helping to maintain rental stock
What Landlords Need to Do Next
Review your investment strategy in light of the unchanged CGT rates. If you are still considering selling a property, now is a good time to consult a tax advisor to make the most of CGT allowances and explore ways to optimize your portfolio. Retaining properties for the longer term can be beneficial in the current environment, especially as property values remain steady and rental demand remains high.
2. Stamp Duty Surcharge Increase on Second Properties
Landlords purchasing additional properties now face a 5% Stamp Duty surcharge, up from the previous 3%. This increase affects those expanding their buy-to-let portfolios and individuals looking to invest in second homes. For a typical £300,000 investment property, the rise translates to a hefty £6,000 extra in upfront costs, which may impact smaller investors and could lead to fewer new rental properties entering the market.
What Landlords Need to Do Next
If you are expanding your portfolio, review the expected return on investment (ROI) carefully to ensure that the extra Stamp Duty cost is offset by future rental income. Consider properties in areas where yields are higher to balance out the surcharge or explore refinancing options that may reduce your overall costs. Expanding in areas with lower property prices can also help mitigate the impact of this surcharge.
3. Energy Efficiency Incentives and EPC Requirements
The UK government’s continued focus on carbon reduction has led to new measures encouraging landlords to improve their properties’ energy efficiency. By 2030, all rental properties will need to meet a minimum Energy Performance Certificate (EPC) rating of “C.” To support these improvements, the budget includes energy efficiency grants covering upgrades like insulation, double glazing, and modern heating systems. Additionally, landlords can benefit from tax relief on energy-efficient upgrades, helping offset some of the compliance costs.
What Landlords Need to Do Next
Start assessing your rental properties to identify which may need EPC upgrades. Investigate the grants and tax incentives available to help cover these costs and consider spreading upgrades over the next few years to avoid a last-minute rush before the 2030 deadline. For larger properties or portfolios, investigate “green” mortgage options that offer lower interest rates for properties meeting high EPC standards, as these can provide additional financial relief while upgrading.
4. General Regulatory and Financial Pressures on the Rental Sector
Beyond the specific measures in the 2024 Autumn Budget, landlords face ongoing regulatory and financial pressures that will shape investment decisions. The budget’s measures are part of a larger trend that includes increased compliance requirements, safety standards, and evolving tax policies. For those with larger portfolios, absorbing these costs may be manageable, but smaller landlords will need to consider ways to streamline management to maintain profitability. With mounting responsibilities, and evolving standards, rental property owners need to be proactive in staying compliant.
What Landlords Need to Do Next
Plan ahead to keep your property management efficient. For instance, investing in property management software can help track maintenance schedules, tenant requests, and regulatory deadlines. For some, outsourcing property management will save time and ensure that properties remain in compliance with energy, safety, and legal standards.
By planning strategically and leveraging available incentives, landlords can keep their properties compliant, attractive to tenants, and financially viable in the changing landscape shaped by the 2024 Autumn Budget.
Let Your Home Managed Help!
It’s easy to become overwhelmed when managing your rental property in London. That’s why more landlords are choosing to work with professional property management companies like Your Home Managed.
We bring expertise, tools, and a level of thoroughness that ensures you get the best advice and you stay compliant.
We take the hassle out of managing your rental property so you can focus on what matters most - whether it’s growing your property portfolio or simply enjoying a stress-free experience as a landlord.
Call Your Home Managed on 0208 125 7780 or email info@yourhomemanaged.com for more information on how we can assist you with property management in London.
In the meantime, we’ve answered some of your common questions about the Autumn 2024 budget.
Frequently Asked Questions About the Autumn 2024 Budget and Landlords
What is the new Stamp Duty surcharge on second properties?
The surcharge has increased from 3% to 5% for second homes and investment properties. This increase makes buy-to-let purchases more expensive up front, especially impacting smaller investors and first-time landlords
Has the Capital Gains Tax (CGT) rate changed for property sales?
No, CGT on residential property sales remains at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers. This decision aims to avoid reducing rental housing supply by keeping CGT at existing levels
What energy efficiency requirements will landlords need to meet?
By 2030, all rental properties must have an EPC rating of “C” or higher. The budget includes grants and tax relief to help landlords fund necessary improvements, such as insulation and efficient heating
Is there tax relief for energy efficiency improvements?
Yes, landlords can benefit from tax relief on qualifying energy efficiency upgrades, helping to offset the cost of meeting new EPC standards. Grants are also available to support installations like double glazing and efficient heating
How does the budget affect smaller landlords versus larger property investors?
Smaller landlords may struggle more with the increased Stamp Duty and upcoming EPC upgrades. Larger investors may find it easier to manage these costs due to economies of scale and the ability to spread improvements across a larger portfolio.
