What The Budget Means For The Property Market in Keighley

Budget 2024 News – What It Means for the Keighley Property Market

With PM Keir Starmer cautioning it would be a tough one, the new government’s first Budget has been eagerly awaited for several weeks.

In this article, we’ll break down what the Chancellor of the Exchequer, Rachel Reeves, announced – with a focus on the key points likely to affect the property market here in Keighley.

The Chancellor began by predicting a slight rise in inflation to over 2% in the coming years, alongside modest economic growth expected to stay within 1-2% annually. She also addressed the much-discussed £22bn ‘black hole,’ explaining it would be closed by £40bn in tax rises.

On a positive note, Reeves emphasised that the Budget’s main goals were economic stability, investment, and ‘putting more pounds in people’s pockets’.

While the Budget covered many areas, here’s a summary of the main property-related announcements and what they could mean for homeowners, investors, and prospective buyers in Keighley.

Capital Gains Tax

Capital Gains Tax (CGT) is charged on profit made from selling an asset, such as property or a business, and is generally lower than income tax rates, particularly for higher-rate taxpayers.

It had been widely speculated that CGT rates would rise – and they did. The basic rate increased from 10% to 18%, and the higher rate rose from 20% to 24%, effective from 30th October 2024.

However, there were no further increases to the CGT rates on residential property, which were already set at 18% and 24%, respectively. This will likely be a relief to landlords, second-home owners, and holiday home investors in Keighley.

IMPORTANT: CGT does not apply to your main residence when you sell it.

Inheritance Tax

Inheritance Tax (IHT) is paid on the estate someone leaves to their beneficiaries. It primarily concerns older homeowners who are considering how best to pass on property and other assets.

Before the Budget, there were rumours that IHT could see changes, such as an increase in rates or reductions in tax-free thresholds.

These rumours proved to be unfounded, at least with regard to residential property. IHT will remain at 40% on sums over £325,000 (the IHT threshold) for at least the next two years.

For those leaving property to a spouse or civil partner, no IHT is charged, and higher thresholds apply when leaving property to children. There are also certain exemptions, including those for gifts to charity and particular types of assets, such as agricultural land.

Stamp Duty

Stamp Duty Land Tax (SDLT) is payable when purchasing property, and recent Chancellors have often adjusted it. However, Reeves resisted making any major changes to the main SDLT structure.

There was, however, an increase in the higher rate of SDLT, which will now rise from an additional 3% on top of the standard rate to 5% for second homes, holiday homes, and buy-to-let properties. This change takes effect immediately and will impact investors and buyers purchasing additional properties in Keighley.

It’s also worth noting that the temporary SDLT threshold increase means the tax currently only applies to properties priced above £250,000 (or £425,000 for first-time buyers). This concession is scheduled to end in spring 2025, despite calls for an extension.

Other Announcements Affecting the Market

Although not all Budget measures impact the housing market directly, factors that affect people’s overall financial well-being can often have a knock-on effect on property trends in the long run.

The Labour manifesto pledged not to raise income tax, national insurance (NI), or VAT for working people in this Budget, and this promise was largely upheld. However, employers’ NI contributions did increase.

Personal income tax thresholds will be adjusted for inflation after a long freeze, though not until two years from now.

On affordable housing, the Chancellor announced an additional £500m investment in the Affordable Homes Programme, which could benefit this section of the market. Additionally, Right to Buy discounts on council home purchases are being reduced.

Final Thoughts

Some aspects of the Budget had already been signalled in advance, while others turned out to be less impactful than anticipated.

While the Budget has significant implications for the economy, the impact on the Keighley property market appears to be relatively modest for the time being.

If you’re curious about how these changes may affect your property’s value or your future plans, we recommend consulting with an experienced Keighley estate agent, such as ourselves, and/or a financial adviser to discuss the best steps forward.

If you know anyone who may find this article helpful, please feel free to share it.

And as always, if you have any questions, don’t hesitate to give our office a call on 01535 872018