Reflecting on the 2024 property market
As we wind down for the year, we take a look at the significant changes to the UK property market in 2024 affecting homeowners, landlords and developers alike.
Legislative Changes
Introduction of the Renters Reform bill
The proposition of the Renters Reform bill seeks to abolish Section 21 eviction notices (or no-fault evictions) and this prevents rogue landlords evicting good tenants in order to get out of carrying out genuine required repair works or to immediately relet the property to someone else for a much higher price. The Renters’ Rights Bill can positively impact property investors by promoting tenant stability, attracting high-quality long-term tenants, reducing legal disputes, enhancing property reputation, improve landlord-tenant relationships and encouraging property improvements
SDLT changes
The surcharge rate for additional properties – called Higher Rates for Additional Dwellings has increased from 3% to 5% from 31 October 2024. This means that it is an extra 5% on top of standard SDLT. This means that investors will pay more stamp duty when purchasing another property.
Furthermore, it was announced that the tax brackets would revert to those pre-September 2022. Currently the rates for a residential purchase mean you pay nothing for the first £250,000, however from April 2025 you will pay 0% on the first £125,000 and 2% for £125,000-250,000. Currently first-time buyers will pay nothing on the first £450,000, however this will be lowered to £300,000 in April 2025.
Planning Permission
The introduction of the Planning and Infrastructure Bill is aimed at freeing up planning laws for development to increase the supply of housing and critical infrastructure projects. This gives planning authorities more power and stops landowners charging “hope values” for developments with planning on them.
This provides several significant benefits for property investors, from streamlined planning processes and enhanced infrastructure investment to incentives for sustainable development and support for urban renewal.
Furnished Holiday Lettings (FHL)
The FHL regime is to be abolished from April 2025. This was announced in the Spring Budget and the intention of this is to remove the current tax advantage for landlords who let short term furnished holiday properties over those who let out residential properties to longer term tenants.
Multiple Dwellings Relief
Multiple Dwellings Relief (MDR) was a UK tax relief that reduces Stamp Duty Land Tax (SDLT) liability when purchasing multiple residential properties in a single transaction or linked transactions. Instead of calculating SDLT on the total purchase price, MDR allows it to be based on the average price of the dwellings, often resulting in significant savings by keeping the calculation in lower SDLT tax bands. This can substantially reduce upfront costs for investors, especially when buying multiple units such as flats or houses.
It was announced in the Spring Budget that MDR will be abolished for SDLT purposes for all transactions with an effective date of 1 June 2024 onwards.
While smaller investors may face challenges with this, the adjustment could level the playing field, reducing competition for large-scale transactions and creating opportunities for innovative investment strategies and partnerships within the property market.
Changes to EPCs for rental properties
The Conservative Government dropped proposals to increase the minimum energy efficiency standard for rental properties to a C. However, the Labour Government brought it back in. Currently the minimum EPC rating for rental properties is E or above, but by 2030 all must be rated a C or above.
Transparency of land ownership
The UK government is enhancing transparency around land ownership, particularly involving trusts, as part of efforts to combat economic crime and ensure better accountability. Under recent and proposed changes tied to the Economic Crime and Corporate Transparency Act 2023, more information about beneficial owners, including details about trusts involved in land ownership, will become accessible through the Register of Overseas Entities (ROE). This includes potential regulations to allow public access to trust information, which could previously only be accessed via applications with limited grounds, such as for law enforcement purposes. For property investors, these changes can bring benefits by fostering a more stable and transparent market.
Amendments to the Building Safety Act
In 2024, significant amendments to the Building Safety Act (BSA) introduced more rigorous safety and regulatory frameworks. Key changes include stricter oversight for high-risk buildings (HRBs), such as those over seven stories or 18 meters in height, with the Building Safety Regulator (BSR) assuming responsibility for approving building control applications for HRBs. This ensures heightened accountability and compliance at every project phase through “safety gateways.” Furthermore, the new rules demand better competence from professionals undertaking building work, enhancing overall construction quality and safety. These measures aim to rebuild public confidence following past safety failures.
For property investors and housebuilders, while these changes bring increased scrutiny and potentially higher compliance costs, they also present opportunities. By prioritising safety and ensuring adherence to robust standards, developers can position themselves as trusted leaders in the market. Additionally, the reforms can improve asset longevity and reduce future liabilities, ultimately protecting investments and reinforcing the value of safer, high-quality developments
Leasehold and Freehold Reform Bill
The proposed Leasehold and Freehold Reform Bill would give leaseholders power to extend their lease and buy their freehold, taking over the management of the building. It also proposes tighter regulation on ground rents and the sale of new leasehold flats.
The Draft Leasehold and Commonhold Reform Bill can positively impact property investors by enhancing property rights, increasing property value, simplifying management, reducing costs, and improving market appeal. Importantly, it also protects leaseholders from predatory freeholders, who use unchecked ground rent to turn profit without adding value to properties or the land they sit on.
Changes to Bank of England base rate
In 2024, the Bank of England reduced the base interest rate twice to stimulate the economy and support borrowers amidst easing inflation. The first reduction occurred in July, when the rate was lowered from 5.25% to 5%, and a second cut followed in October, bringing it down further to 4.75%. These moves were spurred by a decline in inflation, which dropped to 1.7%, comfortably below the 2% target. The changes were welcomed by the property market, as they made borrowing cheaper and improved affordability for both homeowners and investors.
For property investors, these rate cuts provided opportunities to secure more favourable financing, whether through new purchases or refinancing existing properties. Lower borrowing costs helped improve cash flow and profitability, making property investments more appealing. The dual rate reductions also bolstered market stability, encouraging investor confidence in expanding portfolios and supporting a more balanced housing market.
By December 2024, average mortgage rates were noticeably lower than in December 2023, reflecting the general downward trend in the Bank of England’s base rate throughout the year. For instance, the best rates for a 2-year fixed mortgage at 60% loan-to-value (LTV) dropped to as low as 4.22% in December 2024, compared to rates exceeding 5% in late 2023.
Property prices
The housing market has returned to growth in 2024, with more sales and higher house prices compared to 2023. The sales market has performed better than we expected a year ago, thanks to faster growth in household incomes and lower mortgage rates.
In November, house prices saw their largest monthly increase for two and a half years, the latest figures from Nationwide show, as the value of the average home rose by 1.2% in November. This was the largest monthly gain for 20 months.
On a year-on-year basis, residential property prices were up 3.7% – the biggest annual hike in two years. The building society says that prices are now just 1% below the all-time peak recorded in summer 2022 before interest rates began heading upwards.
In January 2024 the average property price was £263,600, whereas the average price is now £268,144 according to the Zoopla House Price Index.
Regions that have seen the highest growth
In 2024, the Northwest of England, particularly Manchester and Liverpool, saw the highest house price growth. According to the Office of National Statistics, in Manchester, the average property price rose by 6.5%, reaching around £230,000, while Liverpool experienced an increase of 8.7%, pushing the average price to £190,000. These cities have become hubs for investors due to ongoing regeneration projects, affordable property prices compared to the South, and strong rental yields, making them attractive for both long-term investment and growth.
The rental market in England also experienced significant growth, with some regions seeing rental prices climb sharply. Cities such as led the way in rental price increases, with rents rising by 7.2%. In Birmingham, the average monthly rent for a two-bedroom property reached £1,150. This growth is driven by strong demand, particularly as more people move out of London in search of more affordable living options.
Conclusion
As we look ahead to 2025, 2024 has set the stage for a more stable and regulated property market. With the introduction of key legislation and regulatory changes, such as the Renters Reform Bill and adjustments to SDLT, investors, homeowners, and developers must stay agile and prepared. While there are new challenges such as increased tax liabilities, opportunities remain abundant in regions like Manchester, Liverpool, and Birmingham, where strong demand and regeneration efforts continue to drive growth.
The broader economic context, particularly the reduction in interest rates, offers renewed optimism for future property investments. Whether you’re looking to expand your portfolio or simply understand the landscape, staying informed and responsive to these changes will be key to navigating the evolving UK property market in the coming years.
