REDD’s Response to the Autumn Budget

A week on from the release of the much-anticipated Autumn Budget, REDD reflects on its impact for the UK prime property market.

Capital Gains Tax

As many predicted, the government has announced an increase in Capital Gains Tax to 18% on the lower rate and 24% on the higher rate, as part of its attempt to make up the shortfall in public finances.

This brings the wider asset rate in line with the already increased residential property rate. While in theory it doesn’t directly impact residential real estate, therefore, increasing the tax burden on profits of wider investments will inevitably give reason for caution in repeat investment.

Positively, there was no change to Corporation Tax, which has already caused a lot of headwinds in the industry in recent years, impacting the attractiveness of the UK as a place to generate company profits.

It has been widely reported that tax and economic health are very finely balanced, so only over time will we see whether this latest move crosses the line.

Stamp Duty

In their election manifesto, Labour proposed a reduction in stamp duty for first-time buyers and an increase of 1% for overseas buyers.

Rachel Reeves in fact announced that the government will increase stamp duty for second homes, by 2% to 5%, which will come into effect immediately.This will drive down the attractiveness of owning a ‘holiday home’ and over time swing this stock back into primary residences. Continued moves against private landlords will also put increased pressure on an already stretched rental market.

Non-dom Tax Relief 

As expected, the government has made good on its commitment to abolish tax relief for non-doms from April 2025, which puts pressure on the appeal of the UK as a place for international investors to base themselves.

Since this move was announced by the Conservative government in the spring, we have already seen a seismic shift of HNW and UHNW repositioning their set-ups out of the UK – far in excess of what has been reported.

The UK and London’s credentials remain firm, however, as safe and secure environments in which to both live and do business. It will therefore only be with time that we will see if this measure materially impacts business, or whether inward investment can just be governed in a different way.

REDD’s Response

Despite a change in government and the ongoing fallout of the 2022 mini-budget, the prime residential market has shown significant resilience over the first three quarters of this year, with Savills reporting 314 sales of properties worth over £5 million – 56% more than pre-pandemic levels. 

This resilience, combined with a predicted continuing reduction in interest rates, give us reasons to remain optimistic for the prime real estate market as we head into 2025.

The outlook remains extremely positive here at REDD, as we continue to expand and diversify our London portfolio with the redevelopment of a mixed-use property in Mayfair. We also continue work at One Palace Green, one of the world’s most prestigious addresses, while our first sale at 6 Charles Street was completed ahead of launch for £9 million.

To find out more about the impact of the Autumn Budget or to discuss a potential project, contact us.