UK Budget 2024: Mixed Impact on Housing Market
Niamh Byrne, Head of Mortgages at Financial Advice Centre Ltd, discusses the impact of recent events and announcements have had on the UK housing market.
The UK housing market is set to experience a mixed impact following the recent 2024 budget. Chancellor Rachel Reeves announced measures that reflect the Labour Party’s focus on affordability and supporting first-time buyers, yet they also come with adjustments that may impact other areas of the market.
Key changes include a hike in stamp duty on second homes, now at a 5% surcharge (up from 3%) which may deter buy-to-let investors and potentially reduce rental property supply. In an environment where high interest rates are already squeezing landlord profit margins, this additional cost burden may lead to a further departure of landlords from the market.
In the third quarter of 2024, a notable rise in buy-to-let property repossessions was observed, with 710 properties recovered across the UK —representing a 73% increase compared to the previous year. This sharp uptick reflects the increasing financial strain on landlords in the face of higher interest rates and additional costs, highlighting ongoing challenges in the buy-to-let sector.
The exodus of landlords from the market may allow first-time buyers to benefit from reduced competition in this sector and price range. In addition to this, the Chancellor has pledged a £5 billion investment aimed at boosting the supply of affordable housing. This initiative is expected to increase the availability of homes on the market, which could improve options for new buyers and help moderate house price growth in the long term as new developments are completed. Increased housing supply is a crucial step toward addressing affordability challenges and stabilizing the housing market, ultimately making homeownership more attainable for many.
In summary, while the housing market is experiencing some shifts following recent budget announcements, this period also brings new opportunities for first-time buyers. The government’s investment in affordable housing and the potential reduction in competition from buy-to-let investors could create a more accessible market for new buyers. Now may be an ideal time to consider homeownership, as these changes may make your goals more achievable.
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