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Insights // 08 March 2024

Mixed News for Buy to Let Investors but Encouraging Signs for Movers

Partner Luke McMath, in our Residential Property team, reflects on the Spring Budget and the latest housing market data from the Bank of England and HM Revenue & Customs (HMRC).

On 6 March, the Chancellor, Jeremy Hunt, unveiled the Government’s Spring Budget. Whilst many commentators deemed it a relatively uneventful Budget, it did bring some mixed news for buy to let property investors.

The Bad News

Two tax reliefs have been abolished in the Spring Budget:

  1. The Furnished Holiday Letting Tax Regime. This is a tax break that allows properties let as a holiday let (e.g. Airbnb) to be treated in a similar way to a business for Capital Gains Tax and some other purposes. The withdrawal of the relief, which will take effect from April 2025, is intended to push owners towards more traditional lettings such as Assured Shorthold Tenancies (ASTs).
  2. Multiple Dwelling Relief on Stamp Duty Land Tax (SDLT). This is a relief whereby if an investor for example buys a whole maisonette they would have been able to effectively treat the purchase as two separate properties for calculating SDLT. The change means that it will instead be treated as a single, more expensive, property leading to a higher overall SDLT take. This relief has undoubtably been abused as a result of claims for even single rooms to be treated as a second dwelling, to claim the relief, and this factor is the primary reason given for its withdrawal.

The Good News

The Spring Budget has introduced a Capital Gains Tax (CGT) cut, from 28% to 24%, meaning that it will at least  be less costly for those who no longer wish to operate as landlords to dispose of their investment properties. This will take effect from 6 April 2024.

In supporting documents, the Treasury said: “This will encourage landlords and second homeowners to sell their properties, making more available for a variety of buyers including those looking to get on the housing ladder for the first time.”

The Housing Market

Last week brought some positive news for those looking to move home this year.According to the latest figures published by the Bank of England, mortgage approvals reached a 15-month high at the start of 2024. 55,200 mortgages were approved in January, up from 51,500 in December, whilst month-on-month borrowing also increased by £0.5 billion in January.

Newly released figures from HM Revenue and Customs (HMRC) indicated that residential property sales rose by 2% in January versus December, the first month-on-month increase since last August.

However, the Bank of England’s base rate and lenders’ interest rates remain significantly higher than they have in recent memory, with inflation remaining stubbornly high.

Further developments can be expected in what is a General Election year, and there will likely be a great deal of interest in the Autumn Statement later this year.

For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800. 

This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice. 

Luke McMath

Luke McMath

Partner

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