Autumn Budget 2024: what it means for property and infrastructure

The highly anticipated Budget was delivered by the Chancellor Rachel Reeves in the House of Commons today.

Her speech was the longest in 14 years at 77 minutes, but she had plenty to get through, announcing early on that the Budget would raise £40 billion in taxes. The main changes included a rise to employers National Insurance, a rise in Capital Gains Tax, a widening of Inheritance taxes to pensions and increased stamp duty on the purchase of an additional dwellings. More spending was pledged for roads, railways, the NHS and wider infrastructure projects.

Many Budgets have one or two memorable announcements. In this Budget, the announcements just kept coming. All eyes will now be on the markets to see how this lands in the next few days, especially as hopes are high of another rate cut on 7 November.

Here are some of the key announcements:

Stamp Duty Land Tax

The key announcement for the residential property market in the Chancellor’s speech was a rise to Stamp Duty for those buying additional dwellings in England and Northern Ireland. This includes buy-to-let landlords and second home buyers. Stamp Duty is set separately in Scotland and Wales.

There is already a Higher Rate for Additional Dwellings (HRAD) surcharge of 3%. But this is rising by 2% to 5% from 31 October 2024.

bar chart showing stamp duty rates


Those buying additional dwellings accounted for 23% of sales transactions in the financial year 22/23 according to official data, so this move will affect a sizeable part of the market. The move is expected to raise £115m in the next five months, and raise a further £90m in the following 12 months.

The Chancellor said such a move would clear the way for more first-time buyers to access the market, and anything which helps first-time buyers onto the ladder should be welcomed. However, there was no mention in the Budget of the large ‘deposit gap’ which currently exists for first-time buyers, who need to raise around £57,000 in order to put down a 24% deposit on a £240,000 property. There were hopes that a scheme such as ‘Help to Buy’ might be introduced to give potential buyers with smaller deposits access to larger mortgages for new and existing homes.

The additional rate of Stamp Duty will also be paid by non-UK residents purchasing a home in England or Northern Ireland, as well as companies buying a residential property.

The other consideration around the rise in stamp duty is the impact on landlords. There are currently around 5 million homes in the private rented sector, mostly owned by private landlords. While the decision not to change Capital Gains Tax on the sale of additional properties in the Budget will be welcome (see below), adding to the cost of investors buying properties could hinder the smooth functioning of this market, causing housing need while the affordable homes and housebuilding schemes ramp up to delivery.

Laura Dam Villena, Head of Residential Agency at Cluttons says: “The announcement on the surcharge for purchases of additional dwellings has fuelled a rush of last- minute transactions before the imminent changes to SDLT.

“On the ground updates from buyers and sellers alike suggest that many have waited for today’s announcements after many months of uncertainty after an unexpected election earlier in the year. These buyers can now make informed decisions on their future property plans, and we are already seeing an increase in requests for advice on whether to sell or let. Those who want to make a move will probably want to do so before Stamp Duty lifts back up in April next year, as the thresholds ‘revert’ to 2022 levels.

“We also expect that first-time buyers hoping to buy will want to push through purchases in advance of these changes to SDLT, when the threshold for paying stamp duty for those buying their first home will fall from £450,000 to £300,000. This, coupled with the prospect of more interest rate cuts, means we expect a very busy market in the early parts of 2025.

“It is clear that in an environment of ever-changing policy, potential sellers and landlords are seeking a consultancy-based approach on the advice they are receiving from their agents on helping them form decisions on how to make the most from their real estate.”

Capital Gains Tax

Capital Gains Tax (CGT) is rising from today (30 October 2024). The lower rate of CGT is climbing from 10% – 18%, while the higher rate is rising from 20% to 24%. These higher rates will be payable on all capital gains on the sale of assets. This means that the CGT rate for the sale of property will be unchanged at 18% and 24%.

Business rates

The small business rate multiplier will be frozen in 2025-26, and there will be a 40% relief for Retail, Hospitality and Leisure (RHL) properties, up to a ceiling of £110,000. This is a reduction from the 75% relief currently on offer.

The small business multiplier has been frozen at 49.9p, and there was no confirmation of the large business rate multiplier, which we now expect to rise to 55.5p from April next year.

In addition, private schools will lose their 80% charitable relief effective from 1 April 2025.

The main thrust of the Chancellor’s announcements, however, was that she would deliver permanently lower business rates multipliers for RHL properties from 2026-27. She said this will be achieved by ‘co-designing’ a system with stakeholders.

In an associated document, the Government said its intention was to fund lower rates for RHL by levying a higher multiplier on properties with a rateable value of £500,000 or more, capturing warehouses occupied by online sales giants – but this is also likely to capture other large occupiers.

The discussion paper entitled “Transforming Business Rates” recognises that the system has many advantages over other types of tax especially as it continues to raise more than £26bn per annum.  It confirms:

  • An intention to introduce permanently lower multipliers for Retail, Hospitality & Leisure properties with a Rateable Value under £500,000 from April 2026. Ratepayers with an RV below £51k will benefit from a more beneficial multiplier
  • An intention to fund the higher multiplier on properties with a Rateable Value greater than £500,000 which includes the majority of large distribution warehouses.

Key areas within the discussion paper include:

  • Tackling avoidance /evasion – it will consider whether the current empty rate rules are effective and will publish a consultation on the adoption of a “general anti-avoidance rule” for business rates in England.  Both may have an impact upon empty rate management although there are no immediate proposals to change the current rules
  • The potential cost and benefits of shortening the gap between the antecedent valuation date and the date on which valuations come into effect
  • Giving greater transparency over valuations, evidence and a streamlined appeals process
  • The requirement for “Duty to Inform” will be rolled out in phases from 1 April 2026 and it will be formally activated and mandated for all by 1 April 2029
  • A shortened appeal process comprising a single challenge timeline will be implemented for the 2029 Rating List.

Gareth Buckley, national head of rating at Cluttons, said: “While the Government has launched a consultation which will close in March 2025 around business rates, it seems that they are still continuing to ‘kick the can down the road’ on business rates rather than grapple with some of the issues affecting ratepayers. Whilst many retailers will be grateful that the Retail, Hospitality & Leisure Relief Scheme has been extended by a further year, they will be disappointed that the current relief has been reduced from 75% to 40% which brings it in line with Wales. 

“Whilst it is true that there was no scheme in place for 2025/26 this will still come as a massive shock to smaller retailers who currently rely upon the 75% relief granted to them. There will be no impact upon larger retailers as they will still benefit from the overall total cash cap of £110,000. Future help for the High Street will be dependent upon the new multiplier applicable to this sector, over which ratepayers currently have no visibility or certainty.

“All in all, it is business as usual although we wait to see how the Government will tackle some of the issues affecting the system, particularly reliefs, multipliers and the appeal.”

Energy

The Chancellor pledged to strengthen the roles of institutions to improve infrastructure and free them up to invest. The Budget included a focus on new technologies with £3.9 billion for carbon capture/storage and 11 green hydrogen projects – which would be a world first if they happen.

The Budget also refers to an investment of £200 million in 2025-26 to accelerate the roll-out of Electric Vehicle (EV) charging points, as well as £120 million to support the purchase of new electric vans. The 100% First Year Allowances for EVs will be extended for another year.

Wind power was not mentioned, but then the Labour government did, in the first few weeks of taking office, reverse the damaging “no onshore wind in England” de facto ban introduced by Cameron. We hope that the original commitment to at least doubling onshore capacity by 2030 will become a reality.

The much talked about Great British Energy, a publicly owned investment body, will proceed. The company will be based in Aberdeen, with the oil and gas industry as its immediate neighbour, the latter with no change to the decarbonisation allowances for now. With £100 billion allocated over the next 5 years, it will exist to invest in renewable energy and to develop clean power projects. We hope it will have a truly national reach and contribute to unfastening the locks on investment purses.

The commitment remains to the government’s strategic plan for long-term energy infrastructure. The plans for this were published a week ago, which “will help cut grid connection waiting times, reducing overall system costs and accelerating the government’s clean energy superpower mission” giving investors’ confidence on where and when to build.

Ian Paton, partner in Cluttons’ energy and utilities team, said: “Most people in the industry are clamouring for regulatory permission blockers to be relaxed and streamlined to allow investment to happen. The money is there, and we hope the legislative framework will be amended to allow it to be spent, the infrastructure developed, and the clean energy goal realised. The final piece of this jigsaw for us ordinary people will be to break the unit cost of electricity link to gas prices, so that we can all benefit from cheaper clean electricity.”

Digital connectivity

The Chancellor referred to a £500 million investment in 2025-26 to deliver Project Gigabit and Shared Rural Network – designed to drive the roll-out of digital infrastructure to underserved (usually rural) parts of the UK.

However, in their manifesto, the Government acknowledged that more needs to be done to meet the UK’s targets for full standalone 5G coverage across the UK, as well as full coverage for gigabit-capable broadband. The UK was recently ranked 51st in the world for mobile data speeds, so more progress here is crucial. The Government will publish an infrastructure strategy in the Spring, and we very much hope that digital connectivity will be included in this, as we believe that connectivity is now a utility, not a service.

Darren Zitren, head of infrastructure at Cluttons, said: “In her speech, the Chancellor said that she will invest to modernise HMRC’s systems, as well as those in the NHS, to use the very best technology. Many of her tax plans hinge on this modernisation, but without the best connectivity, this will be a very difficult task. Putting the infrastructure to support digital progress at the top of the agenda should now be a priority.”

Planning

The Chancellor has pledged to boost planning departments around the country. As already announced, an additional 300 planners will be trained or recruited into local planning departments, and the Budget also refers to ‘boosting and upskilling local planning authority capacity’, although this has no definite investment beside it.

Given the funding constraints on local authorities around the country, the number of additional planners needed might be closer to five or ten times the number promised, but there is a recognition of how fundamental the planning process is in supporting housebuilding and infrastructure.

We highlighted the importance of quick planning decisions in our recent research on digital connectivity, while energy infrastructure providers also rely on planning decisions. Likewise housebuilders and developers – so the Government’s key targets for top class connectivity, net zero and massive housebuilding all rely on these departments.

The Department for Levelling up, Housing and Communities (DLUHC) have completed a consultations on a new National Planning Policy Framework, and Angela Rayner, the Secretary of State, has said the new framework will be issued before the end of the year.

Housebuilding

The Government has been clear that it wants to deliver 1.5 million homes by the end of the Parliament, and this Budget pledged an additional £500 million to the Affordable Homes programme, is cutting the discounts for Right to Buy in order to keep more homes in the public sector – as well as allowing councils to keep all the receipts from any sales – which will allow them to invest in additional properties to replace the homes that are bought by tenants. 

The Chancellor also announced a £3 billion package of support for the Build-to-Rent sector (BTR) – purpose-built rented housing, and for Small and Medium Sized (SME) housebuilders – who are critical if the Government is going to meet its targets on housebuilding. This support will be in the form of government-backed housing guarantee schemes, allowing BTR and SME developers to access lower-cost finance.

Employers’ National Insurance

Employers’ National Insurance will rise from April 2025, increasing by 1.2 percentage points to 15% and the secondary threshold at which NI becomes payable will fall from £9,100 to £5,000. The employment allowance – which limits NI for the smallest businesses and charities – will rise from £5,000 to £10,500, but even so, the move will raise £23 billion for the Treasury in the first 12 months.

John Gravett, Managing Director at Cluttons, said: “For all businesses, this change goes right to the bottom line,  and for smaller businesses who have more cost constraints, this may have an impact on recruitment decisions which then has consequences for the uptake and use of office space. A strong labour market and functioning commercial property market are crucial for economic growth. While it is important to repair the public finances, this move could serve to stifle economic growth at the same time.”

© Cluttons LLP. 2024. This publication is the sole property of Cluttons LLP. and must not be copied, reproduced, or transmitted in any form or by any means, either in whole or in part, without the prior written consent of Cluttons LLP. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Cluttons LLP does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication. We strongly recommend that you always seek advice and presentation from a suitable qualified professional on any matter.

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Gráinne Gilmore

Director of research and insights

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Grainne Gilmore, Cluttons
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Laura Dam Villena

Head of London residential agency

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Gareth Buckley

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Ian Paton

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Darren Zitren

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Darren Zitren, head of infrastructure, Cluttons
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John Gravett, Managing Director, Cluttons

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