Labour's first Budget: A view from the property industry by Oliver Bottomley of Huddersfield-based Vivly Living

A reaction to Chancellor Rachel Reeves’ historic Budget by OLIVER BOTTOMLEY, associate director, land and development, at Shepley-based Vivly Living

“I have mixed feelings about this Budget. On the one hand, Labour has stuck to its commitment to reforming the stifling planning laws and to building 1.5 million new homes, underlining its support of small and medium-sized residential building companies. That is very good news and will go some way to resolving the housing crisis in this country.

“On the other hand, the hefty tax rises for businesses large and small will inevitably mean less money in everyone’s pockets – and less money to buy new homes.

“More specifically, the increase in Stamp Duty on buy-to-let properties and second homes from 2% to 5% from 31st October 2024 will dampen demand.

“It is also important to note that Chancellor Rachel Reeves is not continuing with the Stamp Duty reductions introduced by the Conservatives.

“This means that the Stamp Duty threshold, which currently kicks in at £250,000 will now kick in at £125,000 and for first time buyers, currently at £420,000, it will become payable at £320,000 after the start of the new tax year in April.

“This is significant as there will now be a rush to buy homes before the higher thresholds become law.

“Meanwhile the rise in Capital Gains Tax on second properties, with the lower rate going up from 10% to 18% and the higher rate up from 20% to 24%, won’t help. Neither will National Insurance contributions going up from 13.8% to 15%, which will stifle growth.

“Much depends on how the markets react to this Budget and what happens to interest rates. So far the markets have been ambivalent, and commentators can’t agree on whether interest rates will go up, go down or stay the same.

“That said, the UK business community has almost universally condemned the Chancellor’s savage tax hikes. I do understand that the UK’s finances are in a parlous state, but I’m not sure how Rachel Reeves’s avowed aim of promoting growth will be achieved by imposing £40bn of tax rises.”