What does today’s budget speech mean for mortgage & property markets? Experts react to main take-aways
With so much speculation doing the rounds ahead of Chancellor Rachel Reeves first budget today, mortgage and property professionals have had much to ponder in terms of specific measures that might impact the sector. Whether it was rumoured changes to stamp duty, planning rules, changes to social housing, the rental market, for CGT or IHT changes, there has been much on her radar. Of course, that’s all in addition to wider measures such as changes to business taxes, changes to the fiscal rules and the impact on gilts possibly affecting mortgage rates etc.
So now we know. Today’s budget statement has now clarified the situation, with the Chancellor announcing measures affecting mortgage and property markets.
Mortgage and Property experts have been sharing their reaction to those measures introduced in today’s budget statement as follows:
Commenting on the Stamp Duty surcharge on second homes by 2% to 5% effective from tomorrow, Stevie Heafford, Tax Partner at HW Fisher said “The Chancellor has increased the surcharge on second homes by 2% to 5% effective from tomorrow. This is a bold move which will have an impact on the property market particularly for individuals who are in the process of selling their first home after acquiring their new main residence.”
Angharad Truman, ARLA Propertymark President comments on the increase to Capital Gains Tax saying: “We continue to see a growing disparity in the number of private rented homes available against a backdrop of increasing demand from tenants. Therefore, it is disappointing to see that the UK Government did not address this fundamental issue in its Autumn Budget and instead has announced yet another blow for landlords by increasing Capital Gains Tax.
“The private rented sector plays a crucial role in housing the nation with over 4.6 million homes in England alone, therefore it is imperative that the UK Government does not continue to push landlords out of the market.
“In order to ultimately keep people in much needed and affordable private rented homes, we continue to stress the importance of support for the private rented sector including incentives for landlords to invest rather than continuing to penalise them through regulatory bombardment and increasing costs.”
Tim Parkes, CEO of RAW Capital Partners, said: “This bumper Budget will not be popular with many property investors or brokers, but the new reality has at least been laid out before them. The level of uncertainty and speculation there has been over recent months regarding potential government reforms has been unhealthy, so having a clearer view on the policies being introduced is an important step forward. Landlords and investors, in particular, are now in the position to make informed choices about their portfolios. And, given the upward trend in property and rental prices this year, plus the recent drop in inflation and interest rates, we could start to see greater growth and momentum within the UK property market, even if the BTL market faces challenges.
“It is also important we see the bigger picture. The private rental sector is being subjected to tax and regulatory reform, but at the same time the government is working to stabilise the economy and drive growth, which was highlighted by today’s commitments to investing in public services. If these initiatives have their desired effect, they could strengthen consumer confidence and set the UK on a clear growth trajectory in the coming years. Therefore, while the abolition of the non-dom tax status and increases to Capital Gains Tax (CGT) and stamp duty may introduce additional complexities or costs for some landlords, we should not overlook the fact that the overarching appeal of the UK as an attractive property investment destination remains strong.
“Now, it’s essential that lenders and brokers step up and support investors who are eager to begin or expand their portfolios in the UK market, which includes providing guidance on how their investments will be impacted by today’s raft of announcements. Reforms are coming. Rather than dwelling on their drawbacks, it’s time to seize the multitude of opportunities that this highly attractive and resilient asset class will continue to provide in the months and years ahead.”
Ross Turrell, Commercial Director at CHL Mortgages, said: “Today’s Budget clearly calls for careful consideration from the buy-to-let (BTL) market. But, given the sector’s proven track record for successfully navigating ever-shifting regulatory and economic landscapes, we should be wary of excessive doom-mongering. Just look at the challenges that BTL landlords have had to respond to over the past decade – while almost every regulatory, tax or legislative reform is framed as an existential threat, the market consistently demonstrates resilience and adaptability.
“The Budget marks another chapter in this ongoing story. The CGT and SDLT changes are obvious challenges, and will not be received favourably by landlords. But at the very least, ending speculation and knowing the details of the policies will bring clarity to the sector after a period of significant uncertainty. This is underpinned by the Chancellor’s broader goal of achieving strong economic growth, which could bolster both consumer and wider property market confidence, ultimately supporting the long-term future of the BTL sector.
“Now, as an industry, our focus should shift to collaboration and building confidence among borrowers, landlords, and brokers as they adjust to new regulatory and tax changes. While it’s tempting to dissect each policy and focus on their potential negatives, our priority must be on providing robust education and support. The reforms have been made – with the right guidance, lenders can help landlords adapt with confidence to ensure a sustainable and resilient BTL market for years to come.”
Angharad Truman, ARLA Propertymark President comments: “We continue to see a growing disparity in the number of private rented homes available against a backdrop of increasing demand from tenants. Therefore, it is disappointing to see that the UK Government did not address this fundamental issue in its Autumn Budget and instead has announced yet another blow for landlords by increasing Stamp Duty on second homes.
“The private rented sector plays a crucial role in housing the nation with over 4.6 million homes in England alone, therefore it is imperative that the UK Government does not continue to push landlords out of the market.
“In order to ultimately keep people in much needed and affordable private rented homes, we continue to stress the importance of support for the private rented sector including incentives for landlords to invest rather than continuing to penalise them through regulatory bombardment and increasing costs.”
John Phillips, CEO of Spicerhaart and Just Mortgages said: “Today’s Budget was an opportunity for Labour to show that its plans for housing are far more than just increasing supply. Sadly this wasn’t the case, with a real lack of support for buyers and the wider housing market. While increasing supply is necessary, we also need tangible support right now to increase routes to homeownership and reduce affordability pressures, particular for first-time buyers.
“While not mentioned, it seems the Stamp Duty relief will still end in April, removing important financial support for buyers and downsizers, while creating another cliff-edge deadline for the industry to deal with. We will have to see if the almost instant increase in stamp duty on second homes does indeed increase transactions as the Chancellor hopes, or whether as some worry, it will impact rental supply further and send rents higher – adding further pressure to those trying to save for deposits.
“With the Budget now done, we have to hope that some of the waiting and seeing will now clear and we see buyers moving forward with plans. Plus, with the consensus being that we will still see another cut to the base rate this year, we will hopefully see some activity from both lenders and potential buyers. It’s a shame though that it is left to the industry once again to do the heavy lifting to support buyers and keep the housing market moving.”
Rajan Lakhani, spokesperson at smart money app Plum: “It’s disappointing that Rachel Reeves has not addressed Lifetime ISAs in the Autumn Budget today. Penalties are hitting more and more first time buyers as house prices continue to soar. Our recent research showed that HMRC has charged some people more than £11,000 to withdraw their Lifetime ISA – a huge amount of money for any first time buyer. Most local authorities in London and 28 local authorities outside London have an average house price of above £450,000. This leaves first time buyers stuck when they finally save enough to buy their first home.
“We feel it’s high time that the situation was made fairer for first time buyers, which is why we’ve been campaigning for the Lifetime ISA limit to be raised to £600,000. It’s important to remember that an increase to this amount would only bring the limit more or less in line with house price inflation since the Lifetime ISA was launched in 2017.
“This was a missed opportunity for the Government to take a stand for the country’s young people by raising the limit, especially considering their election commitment to helping people own their first home. We’ll continue to campaign on this as it is a really important issue for our customers.”
Jon Cooper, director of mortgages at Aldermore, comments: “While it is positive that the Chancellor did not use their Budget announcement to roll back Stamp Duty relief for first-time buyers as was speculated, the choice to increase additional Stamp Duty on second homes from 3% to 5% will have an impact on our housing ecosystem.
“By placing increased pressures on landlords, there will also be increasing costs for renters, not least because we anticipate many landlords might withdraw from the market in response.
“To help repair the housing market in the UK we need to build more homes so that there is less pressure on supply; while there were steps taken in the Budget to support smaller homebuilders, until we take real action to reform planning then it will remain a challenging environment for young people looking to get on the ladder.”
Jerry Mulle, UK Managing Director of SaaS core banking provider, Ohpen: “Today’s Autumn Budget has been anxiously awaited by homeowners and prospective buyers since Labour took office. Unfortunately, it neglected to include details about the permanent mortgage guarantee scheme, promised in Labour’s manifesto, meaning uncertainty around the mortgage and housing market remains.
“Missing an opportunity to alleviate pressure for home buyers, especially for first time applicants, will add further stress to those who are already facing a challenging mortgage application process. In fact, our latest research into the current state of mortgage applications reveals that 38% of homeowning 24–35-year-olds wished they rented for longer instead of going through the mortgage application process due to how stressful it is.
“The Government has a huge role to play in alleviating stress on homebuyers, by providing clarity to schemes and delivering on manifesto promises, however, with a fifth of consumers aged 18-54 asking for better online tools to relieve stress during the mortgage application process, mortgage lenders must face the reality of the inefficiency delivered by archaic legacy systems.
“The industry doesn’t need to wait for the Government to work together to make the mortgage application process more transparent and inclusive from the outset. With a joined-up approach, the industry can speed up the application process by taking complex legacy technology out of the equation and enable better real-time data sharing between all the stakeholders involved in the home-buying journey.”
Paul Hardy, Managing Director of LSL Estate Agency Franchising: “The biggest relief is that the budget is finally over; we can stop with the speculation and get on with navigating the market. The changes announced have confirmed several rumoured amendments that will have some impact on mainly landlords and property investors. On a positive note it’s a relief that household property has been spared incremental Capital Gains Tax, which on one level suggests that the Government does have some appreciation of the value of the Private Rented Sector and on another level may persuade Landlords not to exit. However the increase in Stamp Duty on the purchase of second homes, from 3% to 5% – with immediate effect – is a real and sudden financial impact on investor landlords planning to expand their portfolios. For our estate agency franchise partners across the UK, today’s announcement is all in a day’s work; they’ve dealt with worse, and the long-term resilience of the UK housing market, coupled with strong demand for rental properties, positions the sector well to respond to the new budget measures. Ultimately, property remains a sound investment, and as long as the financial markets remain stable post-budget, the property market will keep thriving.”
Paresh Raja, CEO of Market Financial Solutions, said: “The government’s commitment to house building should stimulate activity across all segments of the housing market, creating a wide range of opportunities for buyers and investors. But people can be forgiven for listening to today’s Budget pledges with a degree of scepticism – almost every Budget includes promises to build more homes, but the devil is always in the detail.
“Reforming the planning system is clearly key, so the government’s focus on this area is welcome, with the rumoured additional planning officers being confirmed by the Chancellor today. It not only needs to be easier for new developments to get the green light, but also for investors and property owners to do more with existing real estate – conversions, renovations and extensions can do a lot to boost the national housing stock.
“It’s equally important that the Government ensures new homes are delivered where demand is highest. If the location, type and quality of property is not high enough, there will be a struggle to attract buyers and renters, so there has to be a sharp focus on building the right properties in the right places.
“Incentives like the Right-to-buy scheme should always be welcomed. Ultimately, anything that will help more people get on or move up the property ladder is a positive move in creating an equitable property market. Further, greater accessibility typically spurs on activity throughout the market, which helps build momentum and boosts the UK economy. A rising tide lifts all boats, as the saying goes, and that’s why landlords and investors, despite facing challenges of their own, can still benefit from a more buoyant market.”
Trevor Kearney, founder of The Private Office: Real Estate says: “This Budget may be a “painful” one for some corners of the economy, but for property, it’s not all doom and gloom. Non-doms are fleeing to places like Milan and Dubai, but this does not mean they’re abandoning the UK forever. They will still keep a hub in the UK and travel back and forth and the UK will continue to be the ultimate destination to do business. Interestingly, we’re seeing our clients prioritise education and good schools and the UK’s education system is second to none – that’s a huge retainer, even with the added VAT onto fees. While property won’t take the same hit as other areas of the economy, the Labour government does need to be wary of alienating non-doms and high net worth individuals from living and working in the UK. That’s where the pinch points for the economy will be felt most.
“The decision from the Chancellor to leave CGT levied on the sale of second homes and buy-to-let properties untouched is critical too. The party knows that a decision like that would cost the Treasury a lot of money, by slowing down property sales. Historically, property has always performed better under a Labour government. But for the current government not to buck the trend, property reform on areas such as stamp duty needs to be a priority. Rachel Reeves’ decision to scrap stamp duty exemptions means we’re likely to see a rush to complete property transactions before the stamp duty changes come into effect.
“Ultimately, it’s going to make the rungs on the property ladder harder for first time buyers to reach, let alone climb. While the Government need to raise money, this shouldn’t be the area to try and do it through. A policy decision like implementing stamp duty for sellers rather than buyers would not only incentivise people to buy but help many first-time buyers onto the property ladder, at a time when rental prices have reached record highs.”
John Fisher, Mortgage and Protection advisor at True Potential Wealth Management said: “Obviously the headline from a mortgage perspective is the increase in 2nd Property Stamp Duty from 3% to 5% with immediate effect. I have already had a client been in touch with an on-going case from which he is now seriously contemplating withdrawal. Long term I don’t think it will have a massive effect as I have seen the numbers of new BTL applications reduce significantly over the last few years.”
Terry Woodley, MD of Development Finance at Shawbrook, commented: “Reducing planning red tape and streamlining processes is going to play a crucial role in delivering the ambitious 1.5million new homes target. But it’s not the only answer: a multi-faceted approach is needed to really address the issues currently facing developers
“The recruitment and training of additional planners will take time, and any further planning reform remains unclear. The Government must prioritise effective, comprehensive planning overhauls to kickstart progress and unlock the UK’s full housebuilding potential.”
Paul Noble, CEO of Chetwood Bank (formerly Chetwood Financial), said that: “The property market was certainly a major focus of the Chancellor’s speech. With planning reforms and housebuilding promises, the Budget reaffirmed Labour’s manifesto pledge to tackle the UK’s housing shortage. But those are long-term strategies – in the here and now, it is the reforms to Capital Gains Tax (CGT), Stamp Duty and Inheritance Tax that will impact the market, forcing landlords and property investors to consider their plans, particularly with the Renters Reform Bill and new EPC rules already on the table.
“The mortgage industry must move quickly to adapt in line with these changes. For specialist lenders, the focus must be on supporting landlords and investors who may now want to change their business model. No doubt some landlords will alter their long-term plans in light of the tax reforms, while others will be concerned with the impact of the increase in the rates of CGT and the higher SDLT surcharge for second homes.
“It will take some time for the dust to settle from today’s Budget. But now more than ever, lenders have to combine the right products with exceptional client support. This, in turn, will allow all manner of property buyers, as well as existing property owners, to make informed decisions and execute their own plans with confidence.”
