Driving force in real estate: Strong buyer demand and sales, sparking questions about Budget's potential impact on the housing market
The UK housing market is bracing for changes as the Autumn Budget 2025 approaches, with potential shifts in stamp duty, capital gains tax (CGT), and tenant rights that could have significant consequences for transactions, prices, and market dynamics.
Stamp Duty
The budget continues restrictions on stamp duty relief, which is already deterring over 70,000 home sales annually. Some reports suggest the government may scrap stamp duty for primary homes over £500,000 and replace it with a capital gains-style tax, creating uncertainty and potential cost increases for homeowners.
Capital Gains Tax (CGT)
Labour’s proposals may introduce or expand CGT on primary residences, targeting either homes over £500,000 or potentially £1.5 million. This could affect a notable portion of high-end properties, particularly in London and the South East. Introducing CGT on home sales is predicted to reduce transactions substantially by increasing costs and complicating housing chains, potentially harming the market and homeowner welfare.
Tenant Rights
There is no direct information from the search results indicating specific Autumn Budget changes relating to tenant rights. However, wider fiscal tightening and economic headwinds affecting manufacturing and real estate could indirectly impact rental markets through constrained investment and supply.
Economic Context and Outlook
The Autumn Budget prioritizes fiscal discipline with tax hikes on inheritance and capital gains alongside spending cuts, targeting debt reduction by 2030. This approach risks stifling private-sector investment amid fragile productivity and inflation uncertainties, with the real estate sector facing headwinds and slower growth forecasts (GDP growth at 1.0% and inflation peaking around 3.8%). Despite these challenges, property market data indicate some resilience, with transactions up 30% year-to-date in 2025 compared to 2024, though price growth is expected to remain steady but modest due to rising home supply.
Market Trends
The Royal Institute of Chartered Surveyors (RICS) conducted an August survey showing a positive shift in the UK housing market. The majority of respondents predict a steady rise in house prices over the next three months. The ongoing struggle between healthy tenant demand and a lack of available rental properties is expected to push rents higher. The supply of rental properties remains sluggish, with new landlord instructions falling, as indicated by a net balance for new rental listings of -21, down from -9 last month.
Despite these challenges, the market shows resilience, with estate agents and surveyors expecting further growth in the property market as we head into the final quarter of the year. Sarah Coles, head of personal finance at Hargreaves Lansdown, attributes the renewed enthusiasm to the cheering impact of the Bank of England's rate cut last month.
Tomer Aboody, director of specialist lender MT Finance, suggests that a subdued market reaction could result if the Budget proves to be as bad as feared, but hopes for an interest rate reduction to boost activity and sentiment. New legislation to strengthen tenant rights could mean more landlords deciding to sell up, potentially leading to an even smaller supply of rental properties. Potential changes to capital gains tax in the forthcoming Budget could simultaneously push rents up and keep a lid on property prices in the sales market.
In summary, the Autumn Budget’s impact on the housing market is likely to be contractionary for transactions due to increased tax burdens from CGT proposals and persistence of stamp duty effects, potentially reducing market fluidity and slowing supply renewal. Tenant rights impacts appear unclear from current budget details, but overall economic conditions may put pressure on real estate investment and rental availability.
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