Mini budget - key changes for property investors

As expected, the Chancellor set about filling the 'black hole' in the government's finances with a series of tax and spending measures, a number of which will affect buy to let investors. As one property professional put it, "It could've been worse".

With a £55 billion 'black hole' to fill, Jeremy Hunt was expected to announce pain all round. He didn't disappoint. Here are the main points property investors will want to take note of.

Interest rates

Perhaps Mr Hunt's first task was to regain the confidence of the financial markets. He had already gone some way to achieving this upon his appointment by Liz Truss when he unwound some of his predecessor's measures. Bond markets have stabilised since then and, crucially for mortgages, swap rates started to fall to levels closer to those before the Kwarteng September mini-budget.

Capital Gains Tax

The CGT allowance has been reduced from its current £12,300 to £6,000 from April 2023 and £3,000 from April 2024.

According to Hamptons Research, the average capital gain made by an investor selling this year was £98,050. The new rates will mean an additional tax for a higher-rate taxpayer of £1,770 in 2023, rising to £2,610 in 2024. Frustrating, yes, but a deal-breaker? For most, probably not.

Dividend allowance

The dividend allowance will be cut from the current £2,000 to £1,000 in 2024 and again to £500 in 2024. This will affect UK resident investors who own their properties through a limited company structure as they typically take their profits as dividends.

Stamp duty

The previously announced increase in the nil rate band from £125,000 to £250,000 will remain in place - but only until March 2025. While this may bring some sales forward from 2025 to 2024, it is unlikely to have any effect on the housing market over the next year.

The buy to let and foreign investor surcharges remain unchanged.