UK Budget 2024: significant tax increases and housing investment announced.

In a sweeping move to reshape the taxation landscape and address housing needs, the UK government has unveiled the 2024 Budget, presented by Chancellor Rachel Reeves. The budget includes adjustments to stamp duty and a significant commitment to affordable housing.

Stamp duty increases

Chancellor Reeves announced a 2% rise in the stamp duty surcharge for the purchase of second homes, increasing the total surcharge to 5%, effective immediately. This change aims to generate additional revenue and moderate the property market.

For first-time buyers, the temporary exemption threshold will decrease from £425,000 to £300,000 starting April 2025, making it more challenging for them to access tax relief. Additionally, from April, existing homeowners will face stamp duty on properties valued over £125,000, down from the previous threshold of £250,000.

Housing investment commitment

In a significant boost for social housing, the government has allocated £500 million for the construction of 5,000 new affordable social homes. This investment contributes to a total housing investment that exceeds £5 billion and supports the delivery of 33,000 new homes through an additional £128 million for various projects.

The new housing initiatives will focus on delivering homes for sub-market rent and social rent, addressing the urgent need for affordable accommodation.

Consultation and Right to Buy revisions

As part of the budget, the government will propose a new five-year social housing rent settlement, potentially capped at CPI inflation plus 1%, while also exploring a 10-year settlement option for greater certainty.

To maintain council housing stock, the government will reduce Right to Buy discounts and implement greater protections for newly built social housing. Councils will retain 100% of receipts from Right to Buy sales, allowing them to reinvest in social housing initiatives.

Funding specifics and future plans

The £128 million allocated for new housing projects includes support for up to 28,000 new builds that are currently stalled, 3,000 energy-efficient homes, and 2,000 new homes in North Liverpool. This funding aims to address the pressing need for housing and promote sustainability in new developments.

The £500 million designated for new affordable homes adds to the existing Affordable Homes Programme and comes ahead of a comprehensive Housing Strategy expected in the spring.

Conclusion

The 2024 Budget reflects the UK government's commitment to fiscal responsibility and addressing housing challenges through significant tax increases and robust investment in affordable housing. As Chancellor Rachel Reeves outlines these changes, the impacts on individual taxpayers, the housing market, and overall economic stability will be closely monitored in the coming months. Stakeholders across various sectors will be keen to assess how these measures will shape the future of housing and taxation in the UK.

Although every effort has been made to ensure that the information provided in this article is accurate and correct, the information provided does not constitute any form of financial advice. We recommend that you take financial advice before making any financial decisions.