“They are providing much needed rental supply into the market and without this tax break it is yet another deterrent towards investment into the private rental sector. Not good news for tenants as fewer landlords results in higher rents.”
Short-term rentals: In recent years, the short-term rental sector has boomed as some landlords have found it more profitable than long-term lets, while others have simply capitalised on the increase in the number of people holidaying in the UK or using short-term accommodation options for work.
The spring budget revealed that the tax relief available on furnished holiday lets in England will be removed from April 2025 – later than many of the other measures will come into play – to try and boost the number of properties being let on a long-term basis instead.
This will mean that short-term and long-term lets will be treated the same for tax purposes, in terms of what reliefs can be claimed.
No 99% mortgage: This was something that was widely expected to be introduced as a government-backed scheme to stimulate the housing market, after it had been leaked that the Chancellor was considering this for the spring budget. However, this is not something that will be introduced at this point.
More spring budget reactions
As ever, parts of the spring budget announcement were welcomed by some in the industry, while others criticised a lack of real change or progression to help the industry.
Paresh Raja, CEO of Market Financial Solutions, said: “In his attempts to woo voters before the upcoming election, the Chancellor missed a trick by not bringing forward more meaningful, positive policies for the property market. But we knew that was likely to be the case.
“Cutting property CGT rates will be welcomed in some quarters. But elsewhere, after years of tightening regulation in the buy-to-let market, the Government has indeed now moved to put the squeeze on holiday lets. Ensuring there are ample properties available for local homebuyers in tourist hotspots makes sense, but it is regrettable that the solution is always to target investors and penalise landlords rather than boosting supply through greater investment into housebuilding.
“We also have to be alert to the fact that scrapping non-dom tax rules risks damaging the appeal of the prime London property market among international investors. Time will tell how plans for a shorter-term non-dom-style tax status might take shape, but given Labour was already pushing to scrap non-dom status, we should not expect much relaxation in this reform.
“That there was so little by way of stamp duty reforms, housebuilding commitments or ways of incentivising landlords to invest in their properties – particularly for energy efficiency purposes – was disappointing. It was telling that Hunt praised the Government for having overseen the building of 1 million new homes in this parliament, even though this figure falls well short of what is needed in a five-year period. Meanwhile, suggestions of new 99% mortgages did not come to fruition.
“Ultimately, after two years of rising interest rates, today’s Budget would have been an opportune moment to bring about a string of policies and reforms to boost the property market. It feels like a missed opportunity.”
Richard Davies, Director of UK Operations at Chestertons, says of the spring budget: “Stamp duty is a major financial burden on buyers that has seriously restricted the freedom with which people can trade up and down to fit their personal circumstances. To make it more economically viable for people to move home as and when their circumstances require, we would have liked to have seen the Chancellor make an adjustment to the current stamp duty thresholds or at least introduce an exemption for downsizers and first-time buyers, which could have boosted the number of larger family homes that are being put up for sale and helped more people get onto the property ladder.”
“Despite mortgage rates coming down a bit from their highs last year, rates are creeping up again and first-time buyers need all the help they can get. The Chancellor’s decision to not extend the SDLT relief for first-time buyers is disappointing news. Whilst this could lead to more first-time buyers rushing to buy a property before the relief ends in 2025, it will eventually make it that much harder for future first-time buyers to get on the property ladder.”
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