As we near the end of 2024, it’s probably fair to say that the year has been a mixed bag for property investors. Despite the optimism many of us felt in January, the market struggled to achieve the momentum we had hoped for. Much of this can be attributed to political uncertainty. The lead-up to the general election saw activity stifled as buyers and sellers alike hesitated, choosing to wait for a clearer picture of what lay ahead. Then, just as things began to stabilise, the market experienced another pause ahead of the autumn budget, with anxiety in the market largely fuelled by Keir Starmer’s end-of-summer statement, warning of “tough decisions” on the horizon, leaving many investors bracing for the worst.
However, as it turned out, the outcome of these political events wasn’t as severe as feared. Capital Gains Tax (CGT) rates for property investment have remained unchanged, to the major relief of investors. The introduction of an additional surcharge on Stamp Duty Land Tax (SDLT), whilst a negative change, was broadly seen as manageable and palatable. These developments provided some reassurance, helping to calm nerves and rekindle confidence in the property market – that now at least, we could look ahead with greater certainty.
Another positive was the arrival of the turning point in the interest rate cycle and, while the pace of future cuts is now expected to slow, the cost of borrowing is noticeably lower than it was at the start of the year, giving property investors room to manoeuvre and evaluate new opportunities with more optimism.
Other significant factors this year included the progress of long-anticipated legislation, such as the Renters Reform Bill, which is expected to come into effect next summer. This has been a talking point for some time and offers little to spook investors. The general consensus remains that it should only really concern bad tenants and bad landlords. For professional property investors who maintain high standards, this legislation is unlikely to have a significant impact. Likewise, proposed changes to leasehold laws have been met with broad approval. These reforms should help reduce uncertainty for those transacting in leasehold properties, whether they are buying or selling. By creating a clearer framework, the changes are expected to increase investor confidence in this segment of the market.
One of the most positive developments this year has been the government’s continued assertions that it will reform planning laws, particularly in relation to change-of-use applications. Property investors have welcomed this focus, as it unlocks new opportunities for refurbishment and conversion projects, which are often key strategies for increasing yields. At Castle Trust Bank, we’ve seen these trends reflected in the ongoing popularity of our Heavy Refurbishment with Drawdowns product. Many investors are looking for flexible financing solutions to take advantage of the opportunities presented by these planning changes, and the response has been encouraging.
As we look ahead to 2025, there is reason for cautious optimism. The hope is that the political stability brought by a stable government and many years until the next election will provide a more predictable environment for investors. Combined with further rate cuts, even if modest, and the continued implementation of planning reforms, 2025 holds the potential for a more robust and dynamic property market.
At Castle Trust Bank, we remain committed to supporting property investors as they navigate these evolving conditions, helping them seize opportunities and build momentum for the future. While this year may not have delivered the breakthroughs many were hoping for, it has laid important groundwork for what could be a more promising year ahead. For investors, the focus now shifts to leveraging the foundations laid in 2024 and approaching the new year with renewed confidence and purpose.
Anna Lewis, Commercial Director at Castle Trust Bank