Give and Take: The Spring Budget 2024

Before Jeremy Hunt stood up in the House to deliver his spring budget, the mainstream media’s focus was on changes to national insurance. But those of us in the property rental sector, already concerned about upcoming legislation, had a different focus: what would the chancellor announce that would affect #landlords and #lettingagents?

I’ve been looking at the #Budget announcements, and poring over the detail, and it seems a mixed bag to me. #TaxCuts for some. Tax breaks are abolished for others. And, once again, there’s a commitment to housebuilding with particular areas of the country mentioned. ?

If I had to give a summary, I’d say it’s a budget which recognises that the housing market isn’t working too well at the moment. Whether these changes are a cure is another matter. Let’s look at some of the details.

An increased VAT threshold

I’ll start with a welcome change to the #VAT threshold which has been increased from ￡85k to ￡90k. I’m sure many small businesses would have liked the increase to be more substantial, but it is a step in the right direction. ?

Changes to capital gains tax (CGT)

The #property gains tax is payable on profits made when selling property that isn’t your main home. It covers both second homes and buy-to-lets. Currently, the rates stand at 18% for basic-rate taxpayers and 28% for higher and additional-rate taxpayers. There’s also a tax-free allowance of ￡6,000, but that is due to drop to ￡3,000 from April.

The change announced today affects the 28% rate which is dropping to 24% from April 6, 2024. The idea is that the reduction will encourage second homeowners and landlords to sell their properties. It’s an interesting move, coming at a time when many landlords are already thinking about selling up because of the #RentersReformBill. ?

Multiple dwellings relief to be abolished

This change will affect large landlords or those aiming to build a portfolio. Previously, in a move aimed at encouraging investment, a buyer of multiple properties in a single transaction – e.g. several apartments in a new development – would pay #stampduty as if the transactions were separate. Now the total cost of the properties will be combined, and the buyer will pay the higher rates applicable to higher-value properties.

Holiday lets

The Chancellor has decided to abolish the Furnished Holiday Lets tax regime from April 2025. No doubt the move is aimed at stopping the drift towards short-term rentals rather than long-term tenancies. In certain parts of the country, particularly tourist destinations, it has been near-impossible for people to secure a tenancy. ?

And no mention of mortgages …

It had been expected that the government might give the green light to 99% mortgages or offer some other first-time-buyer incentives, but there were moves on this front.

Chopping and changing

I can see the intention in some of the measures, but I can’t see them doing much to encourage landlords to invest. That’s what we need if we are to tackle the imbalance between supply and demand which is pushing up rents.

As for the holiday-let changes, they will be tough for those who have made this their long-term business model. I can also see the frustration they will cause landlords who, in choosing to move away from long-term lets, have simply been reacting to market conditions and increasingly restrictive legislation.