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Government Policies Set to Reshape UK Property Market

Landlord
Posted in   Oct 28 , 2024
Government Policies Set to Reshape UK Property Market

The property market in the UK has seen many ups and downs in 2024 due to government policies, inflation, and the rise of interest rates. Here's a breakdown of the latest changes and how they affect homeowners, landlords, and buyers.

Key Highlights:

  • Stamp Duty Changes: Potential higher rates for investors and second-home buyers.

  • First-Time Buyer Support: Increased relief and assistance to make homeownership more accessible.

  • Buy-to-Let Sector Under Pressure: Tax changes and high interest rates may push more landlords out of the market.

  • Energy Efficiency Requirements: Incentives for eco-friendly home improvements.

  • Rising Rents: A 12% year-on-year increase in residential rents.

Impact of Stamp Duty and First-Time Buyer Relief

With the 2024 Autumn Budget about to be revealed, speculation about potential stamp duty changes is rising. Investors in high-value properties could face increased stamp duty, while the government may offer more relief to first-time buyers by raising the payment threshold. This would make it easier for younger buyers to enter the market, but investment properties may become less attractive due to the higher taxes.​

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Challenges for the Buy-to-Let Market

Landlords feel pressure from tax hikes and interest rate increases, with many expected to exit the market. The phasing out of mortgage interest relief has already pushed smaller landlords out, and new measures in 2024 could further limit tax reliefs on rental income.​

This could reduce the number of available rental properties, pushing rents even higher, as seen with the 12% rise across the UK in 2023​.

Energy Efficiency and Green Incentives

As part of the government's broader push for greener homes, landlords who invest in energy-efficient improvements, like better insulation or solar panels, could benefit from tax incentives. Properties that meet higher energy standards will likely become more attractive to buyers, especially as energy prices remain high.​

Outlook for 2025

Despite concerns over high borrowing costs, property prices are expected to remain steady due to the ongoing housing shortage. However, the focus will shift toward more sustainable developments, with large institutional investors increasingly dominating the Build-to-Rent sector​ and ensuring the market is open for new buyers and landlords. 

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These policies reflect the UK government's attempts to balance housing affordability, sustainability, and investment opportunities while responding to the growing demand for homes due to economic challenges.

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