What does the Spring Budget mean for UK property investors?
March 08, 2024
Jeremy Hunt
Jeremy Hunt, the Chancellor of the Exchequer delivered his Spring Budget yesterday, March 6, widely expected to be his last before the General Election later this year. There were some surprises in there – a 2% reduction in National Insurance Contributions, lowering the personal tax liabilities for UK residents and the VAT threshold for businesses raised from £85-£90k, both well received. There were some perks also for UK property investors. Here’s what you need to know about the 2024 Spring Budget if you’re a UK property investor.
Four ways the Spring Budget may affect UK Property Investors
ONE
Starting with the very good news that Capital Gains Tax (CGT) on residential property has been cut from 28% down to 24%, meaning investors who sell their properties will be able to pocket more of the profit. The measure will come into place on 6th April 2024.
The government said,
Cutting the 28% rate of CGT to 24% is expected to incentivise earlier disposals of second homes, buy-to-let property and other residential property where accrued gains do not fully benefit from Private Residence Relief (PRR). This will generate more transactions in the property market, benefitting those looking to move home or get onto the property ladder.
Of course, we welcome a reduction in CGT, but we think it’s doubtful that the market will see a rush of stock from landlords looking to dispose of property – especially if we’ve done our job right in encouraging our investors to look for longer-term gains. Still, investors should be happy at a reduction in their potential tax bill.
two
The budget put a strong emphasis on embedding long-term rents into the UK housing market, pivoting away from holiday-style Airbnb lets. Furnished holiday lets took the brunt of this transition aimed to ease housing shortages in places like Cornwall and London, where some residential towers are said to be operating like ‘hotels’. Under the new rules, properties held in personal names will no longer be eligible for tax relief on mortgage interest payments. London’s Evening Standard reported “there are fears that landlords will use an “amnesty” period floated by Government to automatically reclassify thousands of homes as short term lets,” to avoid changes in revenue.
three
Multi-Dwelling Relief (MDR) has been scrapped. Previously this meant that investors buying multiple properties in a single transaction could apply the rate of SDLT to the average value, thus reducing their Stamp Duty exposure. From 1st June this will no longer be possible. The changes are expected to bring in little over £380million.
four
Bringing in substantially more income (said to be billions) are the changes to UK non-doms. Tax breaks on their overseas income are to be axed. Previously, foreign nationals living in the UK were not required to pay tax on their overseas income. This will now change from 2025 with newly arrived non-doms only able to claim zero tax relief for their overseas earnings for the first four years of their residency only and transitional arrangements announced for existing non-doms. PM Rishi Sunak was said to have recused himself from the policy talks because of the conflict of interest with his wife, Akshata Murty being a UK non-dom.
In summary, we’ll take the CGT win and watch carefully the effects of the other proposals on the market as the devil, as always with these things is in the detail.
For landlords with long-term goals and long-term tenants, there’s very little to worry about and we doubt anything the government has done here will materially change the major problem (but advantage for landlords) the UK has which is a fundamental lack of supply.
Read a summary of the key changes on the BBC News website here.
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GEORGE RADFORD
Managing Director
about the AUTHOR
George is the co-founder of RPA Group and Managing Director of the business in the UK and Africa. A qualified Chartered Surveyor (MRICS) with almost 20 years of property investment experience, George has helped his clients to successfully grow and strengthen residential property portfolios over multiple markets and territories. Active in building and advising upon his client’s investments, George is now focusing on procuring UK investments exclusively for RPA Group clients and investors, providing insightful and strategic advice and opportunities.