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Budget – Property Outcomes
The Chancellor of the Exchequer, The Rt Hon Jeremy Hunt MP, presented his 2024 Spring Budget to Parliament on 6 March, which included a number of changes to taxes which directly affect the property industry.
A brief summary of these changes are as follows:
Multiple Dwellings Relief
Multiple Dwellings Relief (or MDR) from Stamp Duty Land Tax will soon be abolished and will apply will apply to transactions effective on or after 1 June 2024. MDR reduces the rate of SDLT payable on a transaction involving the purchase of multiple dwellings so that the SDLT is closer to that which would be payable had those dwellings been purchased in separate transactions from different vendors. It is often claimed on annexes and can reduce the SDLT payable.
Where contracts have been exchanged on or before 6 March 2024 MDR will continue to apply, even where completion of the purchase takes place on or after 1 June 2024, provided that the contract is not varied after 6 March 2024.
Holiday/Short-term Lets
In the emerging ‘Air BnB’ market, many landlords have opted to let out properties on a very short-term basis, taking advantage of various tax reliefs which have existed in connection with such lettings.
The Chancellor has now abolished those tax reliefs in an attempt to ease the pressures on the housing market, which are in particular impacting upon many popular vacation spots, such as coastal resorts. These changes will take effect from 6 April 2025 and 1 April 2025 where property is held by a corporate entity.
The staggered approach will enable landlords to plan ahead on how they will look to let their portfolios.
It’s not all doom and gloom - Capital Gains Tax
Ending on a positive note.
A higher rate of Capital Gains Tax (CGT) applies to gains made on the disposal of residential properties if the gain falls into the higher rate tax band. In his budget Spring Budget, the Chancellor announced a reduction in the higher rate that exists for residential property from the current rate of 28% to 24% from 6 April 2024, which represents a positive step for property investors.