On Wednesday March 6th, Chancellor Jeremy Hunt unveiled the Government’s Spring Budget. As the last before this year’s general election, the budget has received much media attention.
In this week’s blog, we’re exploring the various policy changes introduced in 2024’s Spring Budget, and how they will impact those involved in property.
Drop in inflation rate
The projected decrease in the inflation rate is positive news for the property sector. The Chancellor indicated that inflation is expected to reach its target of 2% or even lower in the coming months. This drop in inflation is anticipated to positively impact mortgage rates, potentially lowering them as the Bank of England base rate follows suit.
Capital gains tax
Jeremy Hunt outlined plans to reduce capital gains tax for residential properties, aiming to lower the higher rate from 28% to 24% starting April 6th, 2024. This change is expected to impact both higher-rate and lower-rate taxpayers, potentially influencing investment decisions in the property market.
Multiple dwellings relief
Multiple dwellings relief, which allows investors to claim Stamp Duty relief when purchasing multiple dwellings in a transaction, will be discontinued from June 1st, 2024. This change may prompt developers and investors to hasten deals before the deadline, potentially impacting the property market in the short term.
Furnished holiday lets tax
Furnished holiday lets tax relief, which currently enables landlords to deduct the full cost of mortgage interest payments from rental income, will be abolished from April 6th, 2025. While owners of furnished holiday lettings are set to lose some significant tax benefits – those who choose to sell their property after 6 April 2024 will be able to benefit from the reduction in the higher rate of CGT for residential property gains. This may bring an increase in supply for the private rented sector with landlords turning from short-term lets to longer-term tenancies.
New homes
Although the budget did not emphasise an increase in new home supply, investments were earmarked for areas such as Sheffield, Blackpool, Liverpool, Barking Riverside, and Canary Wharf. The Government aims to develop Canary Wharf into a tech hub, aspiring to create a UK equivalent of Silicon Valley. Additionally, investments in Cambridge seek to establish it as a leading centre for medical research and health science.
Other notable changes
Several general changes announced in the budget could benefit property stakeholders, including increases in the VAT-charging threshold, reductions in National Insurance rates, adjustments to child benefit thresholds, extensions of the fuel duty freeze and investment allowance for UK ISAs.
Targetfollow
At Targetfollow, we welcome the measures announced by the Treasury. Despite doubts about Britain’s global prominence – which some argue is inflated by past successes – we are optimistic that improved regulations and fresh investments will bolster the nation’s attractiveness and inspire confidence in the UK.
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