Spring Budget 2024 Review: Land & Property

This entry was posted on Wednesday, March 27th, 2024 at 8:30 am

The Chancellor of the Exchequer, Jeremy Hunt, has delivered what is expected to be his last Spring Budget.

 But, which announcements, if any, will impact home and landowners, mortgage borrowers and contractors looking to get on the property ladder? Let’s home in on his offerings (or not) to the UK property markets. 

1. Capital Gains Tax (CGT) Rate for Residential Property Sales

From 6 April 2024:

• • A reduction is proposed in the higher rate of CGT from 28% to 24% for sales of residential property.
    • It is anticipated by the Treasury that this will stimulate the market such that the increase in sales transactions will more than compensate for the lowering of the tax rate.
    • Owners of second homes, buy-to-let properties and other residential properties with accrued gains that do not benefit from Principal Residence Relief will be incentivised to make earlier disposals.
  • The lower rate of tax remains at 18% for any gains that fall within an individual’s basic rate band. 

2. Abolition of Multiple Dwellings Relief (MDR)

From 1 June 2024

• • The abolition of MDRfrom Stamp Duty Land Tax (SDLT) will take effect from 1 June 2024 (it is thought this will be by reference to the date of completion).
    • A consultation had been conducted to examine the extent to which the objectives of the relief were being met.
    • When MDR was introduced it was intended to support investment in residential property and the private rented sector; it is a bulk purchase relief from SDLT which applies to the purchase of two or more dwellings in a single transaction or linked transactions.
    • The evaluation found no strong evidence that MDR supports these objectives and accordingly, it is being abolished which should raise £385 million per annum in additional SDLT.
  • Transitional rules mean that MDR can still be claimed for contracts exchanged on or before 6 March 2024, regardless of when completion takes place, subject to various exclusions.

3. Abolition of the Furnished Holiday Lettings Tax Regime

From April 2025

• • The Furnished Holiday Lettings tax regime is to be abolished.
    • The government had identified the distortions created in local economies as a result of the regime which allows this form of letting to be treated as a trade for Income Tax, Capital Gains Tax and Corporation Tax.  It is anticipated this change will raise £245 million a year.
    • The Treasury hopes this will local people find a home in their community by eliminating the tax advantage for landlords who let out short-term furnished holiday properties over those who let residential properties to longer-term tenants.
    • Holiday let owners will also lose the right to deduct costs of fixtures and fittings from their income, will no longer be able to make tax-advantaged pension contributions, and will lose the benefit of paying a 10% business rate rather than the full capital gains tax rate when disposing of their property.

This is likely to push those with short term lets into long term lettings or encourage them to sell up. If you are a landlord with a short term/holiday let, please contact our sales and lettings team who will be able to guide you through the right decision for you and your property.

4. Stamp Duty Land Tax:  Stamp Duty Land Tax First-time Buyers’ Relief

• A change to the conditions for Stamp Duty Land TaxFirst-time Buyers’ Relief from 6 March 2024 means certain individuals who were previously excluded from this relief will now be able to claim, bringing them into line with purchasers of residential freeholds and pre-existing leases using similar arrangements.
  • Previously, individuals buying a new residential lease via a nominee or bare trust were unable to claim relief on their purchase because special rules that applied to these arrangements treated the nominee or the trustee as the purchaser and not the individual.  This meant that victims of domestic abuse who wished to use such arrangements to prevent former partners from finding their new address were unable to claim relief.

Unfortunately, there was nothing of particular bite in this latest Spring Budget, with many commentators viewing it as a ‘missed opportunity’.  There were some expectations that the Budget would bring new schemes to supply-side forces and to help first-time buyers, Stamp Duty Reforms and the 99% mortgage scheme.  These did not materialise and we wait to see whether such reforms have been held back for a “vote-winning” Autumn Statement.

Until then, market conditions remain favourable for the seller, as demand for properties, particularly in our region, outstrips supply.

Please do get in touch if you would like valuation advice on your property, and to assist in your decision-making process.

Henry Scott BA (Hons) MSc MRICS

Tel: 01653 692151

Email: Henry.Scott@boultoncooper.co.uk