Chancellor Jeremy Hunt today presented his Spring Budget – but what announcements, if any, will impact landlords, mortgage lenders and those keen to become homeowners? We take a look
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The government has ‘missed an opportunity’ to stabilize the housing market and improve prospects for potential home buyers in today’s spring budget.
That is the opinion of mortgage and real estate experts following the speech given by Chancellor Jeremy Hunt today.
The main crowd pullers included a cuts to national insurance, changes to the child benefit system to make it fairer and ISA reforms.
But when it came to property and mortgages, there was less for homeowners and those looking to move up the property ladder to sink their teeth into.
There were expectations that the Chancellor would… 99% mortgage scheme, but this proposal was withdrawn earlier this week. Meanwhile, the long-awaited stamp duty reform that many people hoped for failed to materialize.
Sam Mitchell, CEO of Purplebricks, said: “The failure to take permanent action on stamp duty is a missed opportunity for the Government to stabilize the fragile recovery we have seen in the housing market so far in 2024. Jeremy Hunt should have taken action now or not at all.”
He added: “Following the government’s decision not to move forward with the 99% mortgage guarantee without a proposed alternative – a terrible move in the middle of a housing crisis – the government should refocus its efforts on the most important factor in the crisis: lack of housing stock.”
Here are the announcements affecting mortgages and property that the Chancellor announced today.
Tax relief on furnished holiday accommodations abolished
Tax reduction on furnished holiday rental will be abolished, the Chancellor announced today. The aim of this is to improve the availability of long-term rentals.
This will penalize landlords who wanted to diversify into holiday rentals, which had more tax benefits than traditional buy-to-let.
Emma Jones, director of Whenthebanksaysno.co.uk, said via the Newspage agency: “Holiday let landlords should consider limited companies for their new holiday rental purchases to offset this news of the abolition of the tax credit.
“It is a shame that landlords have been hit again as the last 18 months have been the most challenging for those with longer term rentals.
“Affecting the rest of their portfolios that may include holiday rentals, allowing them to balance their higher rates with their debt, is another blow from this government.”
But on the other hand, it can also help home buyers.
Amit Patel, advisor at Trinity Finance, also through the Newspage agency, said: “Aspiring homeowners will welcome this news with open arms. This will bring home ownership within reach of more people living in areas where holiday rentals have seen huge growth since Covid.
“In recent years, many people have been forced to buy homes in the towns and cities where they grew up, where there has been a high concentration of holiday rentals. This is a win for the public, but a blow for real estate investors.
The multi-occupancy exemption will be abolished
The stamp duty exemption for people buying more than one property in a single transaction has also been abolished.
This is also a change that will have negative consequences for landlords.
Kate Davies, executive director of the Intermediary Mortgage Lenders Association (IMLA), said she would have liked to see the Chancellor provide more support to the sector by announcing a reduction in the 3% additional stamp duty that had been levied on second and subsequent properties. purchases since 2016.
She added: “An incentive to encourage landlords to invest in more properties and increase supply would have been very welcome.
“Instead, we got the opposite, with the abolition of Multiple Dwellings Relief (MDR). Jeremy Hunt openly admits that this relief was intended to encourage investment in the private rental sector, and government figures estimate that MDR was worth £730 million to investors between 2016 and 2022.
“The removal of this incentive is a surprising blow, at a time when the sector urgently needs support.”
Capital gains tax reduced
Meanwhile, Capital Gains Tax (CGT) is the tax that is levied when landlords sell a homewill be reduced from 28% to 24% for higher or additional rate taxpayers selling a home.
Davis said:[This is] little more than a sop for landlords forced to leave the private rental sector due to difficult economic conditions and a punitive tax system. And not even that big of a deal, considering the tax-free allowance for CGT will drop from £6,000 to £3,000 in April this year.”