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What the Spring Budget means for the property market.
Friday, March 8, 2024
Whilst the change to National Insurance contributions grabbed most of the headlines on Wednesday, following Chancellor Jeremy Hunt’s Spring Budget, there were other features which directly impact the property market, for home-buyers, sellers, tenants and landlords.
From April 2025, the removal of tax breaks for short-term, furnished holiday lets may potentially boost the number of properties available for long-term rent in tourist areas since long and short-term lets will now be treated the same for tax purposes. This may make it more attractive to let property to long term tenants rather than short term to tourists in some locations.
Multiple dwellings stamp duty relief was originally designed to support investors and enable landlords to invest in more properties to let to tenants in the private rented sector. However, this was being “regularly abused” according to the government and will now be abolished. Disappointingly, other changes to stamp duty, and thresholds in particular, failed to materialise in the Spring Budget.
There was also no mention in the Budget of a rumoured 99% mortgage to help first-time buyers. Rightmove’s property expert, Tim Bannister, said: “We had hoped the government would seize the opportunity to help first-time buyers and reform the outdated stamp duty system today. Instead, home-movers were left with extremely little, and the temporary stamp duty thresholds weren’t even made permanent, meaning more will pay higher rates of stamp duty next year, unless the government makes them permanent in the Autumn.”
A reduction on the top rate of Capital Gains Tax on property, from 28% to 24%, by the Chancellor has met with mixed response. On the one hand it could mean an increase in properties coming to the market which would increase choice particularly for first time buyers if some landlords take the opportunity to sell up. On the other hand, the downside could be a tightening of private rental levels in the short term.
The main headline remains the cut in National Insurance from 10% to 8%, which should give the average worker an extra £450 per year and this is where the potential to move may materialise for first time buyers. The Chancellor said, “We should help people to keep as much as possible of their own money,” and in doing so may assist first time buyers with lender affordability criteria. As inflation reduces and with lower interest rates to come, buyers are likely to be more confident.
The economic outlook is brighter, offering optimism as the property market heads into Spring. The Office for Budget Responsibility delivered an improved forecast for residential property transactions with property sales forecast to reach pre-pandemic levels in early 2025, two years before previously expected.
If you’re thinking of moving, buying, selling or letting your property, contact your local Frost office for professional advice on what’s happening in your local property market and a free market appraisal.
