The UK property market has experienced significant changes in recent years, and 2024 continues to bring new rules, regulations, and trends that impact both buyers and sellers. From stricter regulations for landlords to changes in taxation and sustainability initiatives, understanding the latest developments in the UK property market is essential for anyone looking to invest in real estate or navigate the housing market.
In this guide, we’ll cover the new property rules in the UK for 2024, as well as key trends that may affect buyers, sellers, and investors.
1. Key Changes in Property Taxation in 2024
In 2024, property taxation rules in the UK have been adjusted to reflect ongoing economic shifts, government initiatives to promote housing affordability, and the need for more sustainable housing practices. Some of the key changes include:
a. Capital Gains Tax (CGT) on Property Sales
One of the significant changes in 2024 is the reduction of the Capital Gains Tax (CGT) allowance.
- Annual Exemption: In the previous years, UK residents enjoyed a CGT exemption of £12,300 per person for the sale of properties. However, this has been reduced significantly to £6,000 for individuals and £12,000 for couples. For those selling buy-to-let properties or second homes, this means more people will now pay CGT when selling their property.
- Higher Rates: The rates of CGT remain at 18% for basic-rate taxpayers and 28% for higher and additional-rate taxpayers. However, because the exemption threshold has been halved, many more individuals may be subject to CGT.
- Principal Private Residence Relief: If you’re selling your primary home, you may be eligible for relief from CGT under the Principal Private Residence (PPR) rules. These rules remain unchanged in 2024, but if the property was used for other purposes (e.g., part-time rental), CGT may still apply on the proportion of the property used for business.
b. Stamp Duty Land Tax (SDLT)
In 2024, there are no significant increases in the Stamp Duty Land Tax (SDLT) rates, but some modifications in the thresholds and reliefs are notable:
- First-Time Buyers: The threshold for First-Time Buyers’ Relief has been maintained at £425,000 in 2024. This relief allows first-time buyers to pay no stamp duty on properties purchased up to this amount. For properties worth between £425,000 and £625,000, first-time buyers pay reduced SDLT at 5%.
- Additional Properties: The SDLT surcharge for additional property buyers (e.g., buy-to-let or second homes) remains at 3%. This surcharge applies to any property purchased in addition to the buyer’s primary residence.
c. Annual Tax on Enveloped Dwellings (ATED)
For buyers who own properties through a corporate structure (such as a limited company), ATED continues to apply for properties worth over £500,000. This tax applies to corporate-owned residential properties, with rates varying depending on the property’s value:
- £500,000 to £1 million – £3,800
- £1 million to £2 million – £7,700
- £2 million to £5 million – £15,400
- £5 million to £10 million – £31,800
- £10 million to £20 million – £63,600
- Over £20 million – £127,000
This is an annual tax, and failure to pay ATED can result in severe penalties, including fines and restrictions.
2. Buy-to-Let (BTL) Rules for Landlords in 2024
For property investors and landlords, 2024 brings further changes to regulations governing the buy-to-let market. These changes aim to provide more tenant protection, address housing affordability issues, and enforce stricter environmental standards.
a. Rent Controls and Tenant Protection
In 2024, there has been growing momentum for rent control laws in some parts of the UK, particularly in cities like London.
- Rent Caps: Some local authorities are considering rent caps to combat the rising costs of private renting, especially in areas with high demand like London and the South East. Although nationwide rent controls have not been introduced as of 2024, individual boroughs and cities may impose specific rules on rent increases.
- Renting Homes (Fitness for Human Habitation): Landlords are increasingly required to ensure that their properties meet higher standards for tenant safety, including measures for fire safety, electrical systems, and general livability. If properties are found unfit for habitation, landlords could face financial penalties.
b. Energy Efficiency Requirements for Landlords
From April 2024, landlords are required to ensure that their properties meet higher energy efficiency standards. This is in line with the UK’s commitment to achieving Net Zero carbon emissions by 2050.
- Minimum Energy Efficiency Standards (MEES): Properties that are rented out must have an Energy Performance Certificate (EPC) rating of at least ‘E’. If a property has an EPC rating below this, the landlord must make improvements to meet the required standard before renting it out.
- Energy Efficiency Upgrades: Many landlords are investing in energy-efficient improvements, such as better insulation, more efficient heating systems, and renewable energy installations (e.g., solar panels), in order to comply with these regulations.
c. End of Section 21 Eviction
A major change that came into effect in 2024 is the government’s move towards abolishing Section 21 evictions. This will make it more difficult for landlords to evict tenants without giving a valid reason, potentially making the eviction process longer and more complicated.
- This move is part of a broader push to improve tenant rights and reduce the power imbalance between landlords and tenants.
3. New Housing Initiatives in 2024
The UK government has introduced several housing initiatives in 2024 aimed at making homeownership more affordable and increasing housing supply.
a. First Homes Scheme
The First Homes scheme, launched in 2021, continues to be a prominent initiative in 2024. It helps first-time buyers purchase a home at a discounted price of at least 30% compared to the market value.
- Eligibility: The scheme is targeted at key workers (e.g., nurses, teachers, police officers) and young families. However, in 2024, the government has expanded eligibility to more areas and increased the number of available homes.
b. Affordable Housing Initiatives
In 2024, the UK government has pledged to continue its investment in affordable housing. New policies focus on increasing the supply of homes in areas with a housing shortage, particularly through Social Housing and Shared Ownership schemes.
- Shared Ownership: This scheme allows buyers to purchase a percentage of a property (typically 25% to 75%) and pay rent on the remainder. It is particularly useful for buyers who cannot afford to purchase a full home outright.
- Affordable Housing Grant: Local authorities are receiving additional funding for building affordable homes. This is aimed at addressing the housing crisis, particularly in urban areas where house prices and rents are outpacing wages.
4. The Impact of Rising Interest Rates on Property Buyer
With the Bank of England raising interest rates in response to inflation in 2023 and 2024, many buyers are facing higher mortgage costs.
- Mortgage Rates: As of 2024, interest rates on fixed-rate mortgages have increased, meaning monthly payments are higher than in previous years. This impacts both first-time buyers and homeowners looking to remortgage.
- Buyers’ Caution: Higher interest rates are expected to slow down property price growth and reduce the number of transactions in the housing market. However, this could also lead to a greater focus on affordable housing and an increase in demand for rental properties.
5. Trends Shaping the UK Property Market in 2024
In addition to the regulatory changes, several key trends are shaping the UK property market in 2024:
a. Increased Demand for Suburban and Rural Properties
As remote work continues to be popular, more buyers are opting for properties outside of city centers. Suburban and rural areas, which offer more space and lower property prices, have seen a rise in demand, especially in areas like the North West, South West, and parts of Wales.
b. Sustainability and Green Buildings
Sustainability continues to be a key focus in the property market, with more buyers looking for energy-efficient homes. Properties with solar panels, heat pumps, and green roofs are becoming more desirable, as both buyers and renters seek homes that align with their environmental values.
c. Technology in Property Transactions
Technology is transforming the property sector, with virtual tours, AI-driven property search engines, and blockchain technology improving the buying and selling process. In 2024, digital tools are making it easier for buyers to find properties, view them virtually, and even manage property transactions remotely.
Conclusion
The UK property market in 2024 is characterized by a combination of evolving tax rules, changing tenant protections, and a growing emphasis on sustainability. Buyers, investors, and landlords must stay informed about these new rules and trends to make informed decisions and navigate the market effectively.
Whether you’re purchasing your first home, renting, or looking to invest in buy-to-let properties, understanding the legal, financial, and market changes will help you stay ahead in a dynamic and often complex market