The Impact of the November 2024 UK Budget on Real Estate Investment Firms
We have previously discussed the real estate investment market outlook for H2 2024 and beyond.
As Chancellor Rachel Reeves unveiled the UK November 2024 Budget, the real estate investment landscape saw notable policy shifts. For real estate investment funds, this year’s budget presents both opportunities and challenges. Here’s a concise breakdown of the budget’s implications.
As Chancellor Rachel Reeves unveiled the UK November 2024 Budget, the real estate investment landscape saw notable policy shifts. For real estate investment funds, this year’s budget presents both opportunities and challenges. Here’s a concise breakdown of the budget’s implications.
Key Takeaways from the Budget:
Residential Market Stimulation
Measures to stimulate the residential market include a £5Bn allocation to affordable housing projects, and planning process reforms, while the 0% stamp duty threshold for first time buyers will reduce to £300,000 from £425,000 and relief will only now be eligible to homes valued under £500,000. Knight Frank notes that mixed-use funds may also see indirect benefits from this push.
Carried Interest Reforms:
- Effective April 2025: The Capital Gains Tax (CGT) rate on carried interest will increase to a single unified rate of 32%.
- April 2026: A comprehensive reform is planned, potentially reclassifying carried interest as income, subjecting it to income tax rates up to 45%, plus National Insurance contributions.
Business Rates Freeze:
The extension of the business rates freezes until 2030 aims to reduce operating costs for commercial property holders. Cushman & Wakefield suggests that this could boost investor confidence in sectors like logistics and office spaces, though it may not fully offset other financial pressures.
Green Investment Incentives:
- Enhanced tax reliefs for green infrastructure investments align with the government’s sustainability goals.
- This includes 100% first year capital allowances for qualifying green technologies, 25% R&D tax credits, and it extends the existing relief or investments in energy efficient commercial buildings (including retrofitting). There is also tax relief available on income from Green Bonds. Centrick Invest highlights that funds investing in renewable energy and sustainable certifications can benefit, matching regulatory trends and ESG-focused investor demand.
The November 2024 Budget provides promising opportunities amidst its challenges. For financial professionals and organisations seeking to optimise these opportunities, it's crucial to acquire a skilled team that understands and navigates the new regulatory landscape.
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12/11/24
