How does The Budget affect your property plans?

The hype around the last Budget before the General Election was almost palpable in the property industry but did the speech live up to the promise? The answer is ‘not exactly’. The Chancellor avoided any drastic changes that would affect the home moving masses but there were subtle alterations, especially for landlords and investors.

So, how does The Budget affect you and your property plans? We’ve outlined the headline changes below.

Planning to make a purchase soon?

Although there was no change to the stamp duty thresholds, nor initiatives to help first-time buyers or a delivery of the muted 1% deposit, Government-backed mortgage, there were a couple of announcements that should indirectly help home movers balance the books.

Measures designed to ease the flow of finances included a 2p cut in National Insurance, which will see a typical worker £450 better off annually, a freeze to fuel and alcohol duties, and a revision to the High Income Child Benefit Tax Charge. The latter should allow more parents to opt back in to receiving Child Benefit – a payment that is due to rise in April 2024.

Own a furnished South Coast holiday let?

Many average families and individuals have been drawn into the holiday let sector, some buying specifically to take advantage of the ‘staycation’ boom, while others have turned to Airbnb to make use of a property they own.

In a bid to boost Treasury reserves, The Chancellor has turned his attention to the holiday let sector and has decided to abolish the furnished holiday lettings (FHL) regime from April 2025.

The current FHL system allows owners of furnished holiday lets to claim full mortgage interest relief, enjoy capital allowances for furniture and pay a lower rate of Capital Gains Tax but these perks are to end. From next year, holiday lets will be treated in the same way as long term lets.

Thinking of leaving lettings?

We know many landlords contemplating selling a buy-to-let have been put off due to the costs attached. Now, the process of disposing of an investment asset is set to become cheaper.

That’s because the higher rate of Capital Gains Tax – a levy paid on any profit made when selling an additional property - is reducing from 28% to 24%. The change will take effect on 6^th April 2024 and the lower taxation rate may convince more property investors to offload buy-to-lets. In return, this may boost the number available properties for owner-occupiers to buy.

Are you an investor keen on expanding your portfolio?

For many property investors, being offered multiple properties for sale in a development with the promise of good yields has been hard to resist. One of the perks of buying more than one freehold or leasehold property at the same time has been Multiple Dwellings Relief (MDR), which results in a cheaper stamp duty bill.

MDR is, however, being scrapped from 1^st June 2024, in a bid to earn the Treasury £385 million more a year. Although not crystal clear in the hours after The Budget, it is thought investors purchasing more than five properties in a linked transaction can still do so using the more beneficial commercial stamp duty rate.

If you need any further clarification on how The Budget affects your property circumstances, give one of our three branches a call. We’d be delighted to talk you through the changes and offer advice on how you can move forward with your plans.