As we reflect on the key points from the 2024 UK Budget, many of our clients—whether they’re first-time buyers, growing families, or those looking for premium properties in the Northumberland and Scottish Borders areas—will no doubt be wondering how these changes will affect their plans in the coming months. At Paton & Co Estate Agents, we’ve been closely following the budget announcements to better understand their potential impact on the property market and how we can best guide our clients through the evolving landscape.
This year’s budget addresses some important issues across the housing sector. Here’s a closer look at the key takeaways and what they mean for buyers and sellers in the Northumberland and Scottish Borders region—and beyond.
Stamp Duty in England – What Does It Mean for Buyers in Our Region?
The Chancellor did not commit to extending the relief on stamp duty for first time buyers in England and Northern Ireland beyond March 2025. As it stands, the SDLT relief threshold is expected to lower from £425,000 to £300,000 from 31 March 2025 when the temporary uplift put in place in 2022 will end. If this change takes effect, first-time buyers purchasing homes above £300,000 will face additional SDLT charges, adding new cost considerations for many.
Meanwhile a confirmed change with immediate effect is the increase in the surcharge rate for additional residential properties in England and Northern Ireland, including second homes and investment properties. The surcharge has risen from 3% to 5%, effective immediately, raising the upfront costs for those investing in rental properties or purchasing second homes in England and Northern Ireland. This surcharge means that it is an extra 5% on top of standard SDLT.
How it affects the market:
No immediate change to thresholds is welcome news to first-time buyers on the English side of the border, but only for the short term. Whilst Northumberland continues to be relatively affordable compared to areas in the south of England, the eventual drop in the SDLT relief threshold will have a direct impact on first-time buyers looking for homes in market towns or rural properties across our region. It’s important for prospective buyers to factor in these potential cost changes and plan ahead for when the threshold adjustment takes place in March 2025. It’s important to note that in Scotland, the equivalent of stamp duty is the Land and Buildings Transaction Tax (LBTT), which has different thresholds and tax rates and these have not changed. The Scottish Government continues to monitor housing affordability and may introduce additional measures as part of the Scottish Budget, something we will monitor closely.
For those buying additional dwellings, the confirmed increase in the surcharge for additional residential properties in England and Northern Ireland, rising from 3% to 5%, is already in effect. This will directly impact buyers looking to purchase second homes, holiday properties, or buy-to-let investments in Northumberland. While this increase may seem modest at first glance, the combined costs of stamp duty and the higher surcharge will increase the upfront financial commitment required for these buyers. The increase in the surcharge could affect demand for second homes and holiday cottages, especially in popular areas where there is strong interest from investors.
For buyers looking at higher-end homes, particularly those valued at over £1 million, the current stamp duty rates remain unchanged, and we know that the appeal of owning property in our beautiful part of the world, with its stunning countryside, historic properties, and proximity to both Edinburgh and Newcastle, will continue to drive demand at this level.
Capital Gains Tax on Residential Property – No Change, But Still a Factor for Sellers
One area that remains unchanged in the 2024 budget is the Capital Gains Tax (CGT) on residential property. The government has opted not to adjust the CGT rates for property sales, meaning that the tax rates remain at 18% for residential property in the basic tax band and 24% for those in the higher tax band.
How it affects the market:
For sellers of investment properties or second homes, CGT will continue to be a factor to consider. While the absence of any changes might be a relief for some, those looking to dispose of residential property should still factor CGT into their financial planning. With no changes to CGT, sellers will need to weigh the tax costs against potential returns, particularly if they’re selling properties that have appreciated significantly over time.
Private Schools Paying VAT – Potential Impact on Property Demand
A less discussed but significant measure in the budget is the introduction of VAT on private school fees. While the change primarily targets private education, its indirect effect on the property market could be felt in areas with a high concentration of private schools or areas popular with families who value proximity to independent schools.
How it affects the market:
For families moving to areas like Northumberland and the Scottish Borders, where access to good schools (including private options) can be an important consideration, the additional cost of private education could influence purchasing decisions. Higher living costs, especially for families with school-age children, may impact demand for certain types of family homes or properties located near independent schools.
While the VAT on school fees will likely affect families with school-age children, it could also have a wider effect on property demand in areas with excellent school options, potentially shifting interest towards more affordable or state-funded options.
Scottish Government Funding – Potential Boost for Housing and Infrastructure
A significant piece of news for our region is that the Scottish Government is set to receive increased funding from Westminster. This will provide additional resources for the devolved government to allocate to key areas, including housing, infrastructure, and local services.
How it affects the market:
For those of us in the Borders, this could mean greater investment in housing development, both affordable and premium properties. More funding for housing initiatives could lead to a push for new developments, improving access to affordable homes and creating a more balanced property market. Additionally, increased infrastructure spending could enhance transport links between the Scottish Borders and major cities like Edinburgh, making the area even more attractive for those looking to relocate or invest.
Increased funding for housing and development could also lead to more incentives for buyers, particularly in rural communities, where new homes could be part of larger regeneration projects or the expansion of local amenities.
Investment in Affordable Housing
The government has committed to increasing investment in affordable housing, with additional funding aimed at building homes for both purchase and rent. This initiative is designed to address the ongoing housing shortage, particularly in regions with high demand.
How it affects the market:
While much of the discussion around affordable housing tends to focus on urban areas, the benefits for our region cannot be overlooked. Increased availability of more affordable housing in towns and villages will help alleviate pressure on the broader housing market, particularly for families looking to upgrade to larger homes or those who may want to downsize.
As more affordable homes become available, we may see greater movement in the mid-tier market, which could also benefit buyers and sellers in the upper end of the market. With more buyers able to secure properties in the lower price ranges, there could be less competition at the higher end, creating opportunities for families or individuals looking for larger homes, country estates, or properties with land.
Support for Homeowners Facing Mortgage Pressure – Stability Across All Sectors
In response to the ongoing pressures of higher interest rates, the government has pledged additional support to homeowners struggling with mortgage costs. They will engage with the industry on plans to make the Mortgage Guarantee Scheme permanently available to support lending at 95% loan-to-value. This includes more flexible mortgage products and schemes designed to assist those facing financial difficulties.
How it affects the market:
While these measures are designed to help those in the mid- and lower-price brackets, they could have a stabilising effect on the property market as a whole. Fewer distressed sales mean that sellers of premium properties in Northumberland and the Borders are less likely to be impacted by a market slowdown.
For high-end buyers and sellers, these measures contribute to market stability, ensuring that there are fewer forced sales, and giving confidence to both those looking to sell their homes and those looking to buy. This is especially important in our region, where demand for properties with land, rural settings, and a high standard of living continues to attract interest from a range of buyers.
Energy Efficiency – A Growing Focus for All Property Types
In line with the government’s sustainability goals, the budget includes further investment in making homes more energy-efficient. This includes grants and incentives for homeowners to upgrade insulation, install heat pumps, and make other environmentally-friendly improvements.
How it affects the market:
Energy-efficient homes are becoming increasingly sought after, not just in urban areas but also in more rural regions like Northumberland and the Scottish Borders. For buyers of high-end homes or family estates, the long-term savings on energy bills and the environmental benefits are key considerations. Properties that have already made energy-efficient improvements—whether through insulation, renewable energy sources, or smart home technology—will likely become even more attractive to prospective buyers in the coming years.
At Paton & Co, we know that many of our clients are keen to make sustainable choices, and we believe that energy efficiency will continue to be an important factor in property valuations. For sellers, investing in energy-efficient upgrades could provide a significant boost to the appeal of their home, particularly if it helps reduce running costs and improve sustainability.
Regional Investment – New Opportunities in the North
Another important aspect of the 2024 budget is the government’s commitment to improving regional infrastructure and encouraging investment outside of London and the South East. With more funds directed at enhancing transport links, local amenities, and business hubs, areas in our region could see a significant boost in desirability.
How it affects the market:
For buyers considering a move to our area, this is excellent news. Whether you’re looking for a family home in a picturesque village, a period property in a historic town, or a rural estate with extensive land, our region offers tremendous value for money compared to southern England. The continued investment in infrastructure—particularly improved transport links between our region and major cities—will make it even more attractive for buyers looking for a combination of rural tranquillity and convenient access to urban amenities.
At Paton & Co, we’re continue to see interest from buyers based further afield, drawn by the quality of life, natural beauty, and growing infrastructure in the Borders and Northumberland. This trend is expected to continue as more people seek out homes that offer both peace and convenience, especially with better connectivity to urban centres.
Navigating the 2024 Budget in Northumberland and the Scottish Borders
The 2024 UK Budget offers a mix of opportunities and challenges for both buyers and sellers in Northumberland, the Scottish Borders and further afield. From thresholds for first-time buyers to changes in taxes affecting second-home buyers and investors, there’s a lot to consider when navigating the current property market.
At Paton & Co Estate Agents, we understand the unique dynamics of the property market here in Northumberland and the Borders. Whether you’re a first-time buyer, looking to sell a family home, or interested in acquiring a second home or investment property, we’re here to offer expert advice on how the budget’s changes could impact your plans.
If you have any questions or would like to discuss how the budget may affect your property interests in Northumberland, Scottish Borders or further afield, don’t hesitate to get in touch. Our experienced team is here to help guide you through this evolving market.
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