Spring Budget 2024: What it means for property investors

Chancellor's Briefcase

The Spring Budget 2024 delivered by Chancellor Jeremy Hunt was highly anticipated, especially within the realm of housing and property. Investors and industry stakeholders were eager to see what measures would be introduced to address the challenges facing homeowners, renters, and first-time buyers. Let’s delve deeper into the key announcements and their implications for the property sector.

Reduction In Capital Gains Tax

The reduction of the higher rate of property Capital Gains Tax from 28% to 24% was one of the positive highlights for investors. This decision aims to stimulate property transactions by providing an incentive for investors to engage in sales. While some stakeholders welcome this tax cut as a means of boosting market activity, others question its effectiveness in influencing landlord behaviour, particularly in light of other regulatory challenges faced by property investors.

Furnished Holiday Let Changes

The Budget addressed concerns about the proliferation of short-term rentals by abolishing the Furnished Holiday Lettings tax regime. This decision reflects the government’s efforts to rebalance the housing market in favour of long-term rental availability for local residents. However, there are lingering concerns about potential loopholes and unintended consequences, particularly regarding the impact on short-term rental operators and the broader hospitality sector. This is not an additional tax on income fir furnished holiday lets, but simply brings the tax liability proportionally in line with income from other property assets.

Multiple Dwelling Stamp Duty Relief

Expectations were high for new schemes aimed at assisting first-time buyers and providing tax relief. However, the Budget surprised many by announcing the abolition of stamp duty relief, including Multiple Dwellings Relief. While the move was intended to curb abuses in the private rented sector, it left property industry members disappointed, as they had hoped for more targeted measures to stimulate housing market activity. The decision to remove these reliefs could potentially impact the decision-making process for both buyers and sellers, particularly in transactions involving multiple properties.

Non-Dom Tax Status Abolished

One of the most significant announcements was the abolition of the non-domiciled tax regime, signalling a shift towards a residency-based system. This move carries implications for the prime property sector, which often relies on overseas investment. While the Chancellor touted the economic benefits of this change, concerns remain about its potential impact on international investor sentiment.

Regeneration Schemes

The Budget highlighted significant investments in regeneration projects across London and other key cities, including Barking Riverside and Canary Wharf. These initiatives aim to address housing shortages and revitalise urban areas, offering opportunities for property developers and investors alike. The introduction of a £20 million Community Led Housing scheme underscores the government’s commitment to supporting grassroots initiatives and empowering local communities in shaping their living environments.

No Change To Lifetime ISA Cap

Despite speculation, there were no adjustments made to the Lifetime ISA cap for first-time buyers. Chancellor Hunt emphasised the need for prudence in housing policy adjustments, indicating a desire for comprehensive reforms rather than piecemeal changes.

No 99% Mortgage Scheme

Leaked proposals for a government-backed 99% mortgage scheme failed to materialise in the Budget. The idea, which aimed to assist first-time buyers by reducing deposit requirements, faced criticism and ultimately was not pursued further.

In conclusion, the Spring Budget 2024 delivered a mix of surprises and disappointments for property investors and stakeholders. While some measures aim to stimulate market activity and address housing shortages, others fall short of expectations or raise concerns about their potential impact. However, overall it is doubtful this will have a major impact on the property market and with many of the changes not being implemented until 2025, there may still time to capitalise on multiple dwelling relief and capital allowances for furnished holiday lets before the changes comes in.

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