Reapit’s Neil Cobbold Comments on Today’s Budget

Neil Cobbold, Commercial Director, Reapit UK&I, shares his thoughts on the measures in today’s budget and how they could impact on the property sector

Economic stability

It’s encouraging to see that economic stability was at the heart of the UK Autumn Budget. The Office for Budget Responsibility forecasts that the measures taken by Chancellor Rachel Reeves will pay off in the form of stable inflation and hopefully lower interest rates over the next few years. This stability should stimulate the housing market as buyers can feel more confident about their borrowing costs.

Despite the worries over the Capital Gains Tax paid on residential properties, the rates will stay the same. But increases in Capital Gains Tax levied on other assets could see more investors looking at property, if they can absorb the Stamp Duty Land Tax surcharge on additional properties, which will increase to 5% on 31 October. The rapid implementation of this surcharge could, however, see some sales currently in progress fall through as investors may not have the budget to cover the tax increase.

Investment in housing

The Chancellor announced investments of more than £5 billion to deliver the government’s five-year plan to build 1.5 million new homes. However, given the time needed to build this stock, agents will not see the sales commission on these properties for some time. Additionally, some of the investment will be allocated to social housing that won’t be available on the open market.

The previously announced £3.5 billion Warmer Homes Grant, intended to improve the energy efficiency of housing stock, was also included in the budget. But restrictions remain on who can apply for the grant, meaning some landlords – who face a 2030 deadline to upgrade their properties to an EPC C minimum – will not be able to benefit from the money.

Agency impact

For agencies, the 6.7% increase in the National Minimum Wage, coupled with the new Employment Rights Bill, could put off businesses from taking on new junior staff and part-time employees.

Additionally, the 1.2% increase in National Insurance contribution and the reduction in the threshold at which employers start paying it could impact profits. But the rumoured fuel duty increase was ruled out, helping agents at the pumps.

Ultimately, if the sales market picks up, agencies may be able to absorb or pass on some of the additional costs they face from the budget. If not, we could see even more mergers and acquisitions in the industry.