Summary Autumn Budget 2024 | Impact for UK Buy-To-Let Investors

Following the first budget of the new Labour Government, led by Chancellor Rachel Reeves, property investors in the UK have a lot to consider. While tax adjustments and regulatory changes are in focus, some aspects of the budget may offer reassurance for buy-to-let investors. Here’s a breakdown of the major points and what they mean for those involved in UK property investment and buy-to-let ventures.

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Tax Increases: What Property Investors Need to Know

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The new budget introduces around £40bn in tax increases, with a focus on National Insurance, capital gains tax, inheritance tax, and stamp duty. Here are some key points:

National Insurance (NI): Employers will see NI contributions increase by 1.2% to 15%, which is expected to generate £25bn. For property investors who employ staff, such as property managers, this rise may slightly increase operating costs.

Capital Gains Tax (CGT): While the general capital gains tax rates are increasing, residential property rates remain unchanged, allowing buy-to-let investors to continue planning without added CGT concerns.

Stamp Duty Land Tax (SDLT): The surcharge on second home purchases will increase from 3% to 5%, which will affect new investments in the buy-to-let market. No changes were made to freeze stamp duty thresholds, meaning an increase will be seen from the end of March 2025.

Relief for Households and Businesses: More Income for Renters
While taxes are on the rise, the budget offers some relief measures that could indirectly benefit the buy-to-let market.

National Living Wage: With an increase to £12.21 per hour, full-time workers could see an additional £1,400 per year, which may improve tenants’ financial stability. For landlords, this could translate into lower vacancy rates and more consistent rental payments.

Fuel Duty Freeze: The government is maintaining the freeze on fuel duty with a 5p cut, which can help stabilise costs for tenants and businesses alike.

State Pension Triple Lock: A 4.1% increase in the state pension next year will add £470 for pensioners. This boost in pensioner income may support buy-to-let landlords targeting older tenants or retirees.

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Economic Forecasts and What They Mean for Buy-to-Let Investors

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The government has forecasted economic growth of 1-2% annually through 2029, aiming to keep inflation at a steady 2%.

Inflation Target: With inflation projected to stabilise, buy-to-let investors may find it easier to plan for rental income and manage expenses over the long term.

Economic Growth: A steady economy is generally favourable for the property market, potentially leading to stable rental demand and price growth over time.

Impact on UK Buy-to-Let Investors: Increased Costs, But Stability in Key Areas
While some of the budget’s adjustments may increase operating costs, the stability of capital gains tax and inflation targets brings positive news.

Increased Operating Costs: Higher NI contributions for employers and continued income tax thresholds mean that landlords with employees may see an impact on profits.

Stamp Duty Changes: With the increased SDLT surcharge on second homes, buying additional properties will be costlier. However, as this is a one-time charge, it is unlikely to heavily impact long-term returns.

Capital Gains Tax Stability: For property investors, the stability of CGT rates on residential property provides certainty and supports long-term planning.

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Encouraging News for Buy-to-Let Investors

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This budget brings several positive points for buy-to-let investors:

Stable Capital Gains Tax on Property: CGT rates on property are remaining stable, offering reassurance to investors in their long-term plans.

Inflation Stability: With a target of 2% by 2029, there is a positive outlook for steady returns in the rental market.

Increased Living Wage: The National Living Wage boost is expected to support tenant finances, which could mean fewer vacancies and more reliable rental income for landlords.

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What’s Next for UK Property Investors?

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For those looking to diversify or begin their property journey, now may be an ideal time to explore Regency Invest’s portfolio of high-growth UK properties. Our options range from buy-to-let investments with strong rental yields to flexible property bonds. For those interested in a shorter-term commitment, our property bonds offer a 12-month renewal, starting from £25,000 with a guaranteed return of 12% per annum, and zero investment fees.

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