Published: 17/10/2024 By Alex Maile
Autumn is here now - the trees are starting to turn orange and gold and the days are getting shorter. It is a time of transition as we move from summer to winter. With the autumn budget looming, it feels like the whole country is in that in-between stage, too, as we wait to see where the new Labour government is heading.Fortunately, the sales market seems to have shrugged off its concerns and prices are rising steadily, with Nationwide’s data showing house prices grew at their fastest rate for two years in September.
However, in the rental market, there is a greater focus on the budget because of the likely increase in Capital Gains Tax (CGT), which, many commentators believe the Chancellor will align with income tax bands.
When that is combined with the Renter’s Rights Bill, which got its second reading in parliament last week, it has led to a number of landlords putting their properties up for sale. The more savvy ones, though, are not, because they know that by sitting tight, supply is going to be squeezed and rents and yields will rise. They also know that CGT is a discretionary tax, so you don’t have to pay it unless you sell.
So, looking at the longer term, as many landlords do, CGT rates are likely to change again. The prospect of a falling base rate is something else that’s giving landlords cause for optimism, as it will reduce their costs and also raise yields. And with property prices rising, the value of their assets is also on the up.
It’s why many landlords believe talk of an exodus has been exaggerated. A recent survey by Butterfield Mortgages in the Financial Times showed nearly two-thirds of UK landlords remain optimistic, both in terms of capital growth and rental returns.
Well, that’s it for now. When I am back next month, we will know the full facts of Ms Reeves’ budget, the speculation will be over and we can see what it really means.