Recent budget changes have stirred discussions about potential impacts on the UK rental market.
- A rise in Stamp Duty for second homes threatens to shrink rental housing supply.
- Investors may exit the market due to increased financial burdens.
- Unchanged Capital Gains Tax rates for residential properties offer some relief.
- The ongoing adjustments could lead to higher rents due to reduced availability.
In the wake of the latest budget announcement, a significant shift in the United Kingdom’s property landscape is anticipated, with experts warning of substantial impacts on the rental market. NAVA Propertymark has voiced its apprehensions regarding the increased Stamp Duty, which saw a hike from 3% to 5% for second homes as of 31 October 2024. This move, according to the body, is likely to dissuade investors from the private rental sector, thereby dwindling the stock of rental homes. The potential consequence of this is a rise in rental prices as the supply struggles to meet demand.
Further complicating the situation is the adjustment in Capital Gains Tax (CGT) rates, which although have remained constant for residential properties at 18% for the basic rate and 24% for the higher rate, pose concerns for those with non-residential holdings. Propertymark’s president, Stuart Collar-Brown, highlighted the risk this places on investors likely retreating from the market, exacerbating the shortage of rental homes.
Collar-Brown noted that the budget reflects mixed reactions from stakeholders. On one hand, the unchanged CGT rates bring some relief to residential property investors. On the other, the increased Stamp Duty highlights the potential for negative outcomes such as decreased private rental stock, inevitably driving up rental prices given the supply constraints.
The recent budget adjustments pose a dual challenge for the UK rental market, threatening both investor participation and housing availability.
