Spring budget 2024: the impact on property managers, landlords, and investors

On 6 March 2024, Jeremy Hunt, the Chancellor of the Exchequer, presented the Spring Budget which provides an overview of government spending policies. This will likely be the last budget update before the General Election, expected to occur later this year.

In the Spring Budget, the government announced changes that will affect property managers, landlords, and investors alike. We're breaking down the key takeaways for the industry.

Capital Gains Tax on residential property reduced

In the Spring Budget 2024, it was announced that the higher rate of Capital Gains Tax on residential property sales will be cut from 28% to 24%. The Capital Gains Tax property rate will remain at 18% for basic rate taxpayers. 

Capital Gains Tax is paid when an individual profits from selling a property that isn't their main residence. This could include the sale of second homes, buy-to-let properties, inherited properties, and business premises. Jeremy Hunt reported that the Treasury has suggested a lower tax rate would increase the volume of property sales and thus boost tax revenues through the economics of the Laffer Curve. 

Multiple Dwellings Relief abolished

Multiple Dwellings Relief will be abolished from 1st June 2024. Multiple Dwellings Relief is a relief in the stamp duty land tax that was previously available when buying more than one residential property at a time (within the same transaction or linked transactions). It was initially introduced to reduce barriers against property investments as it allowed purchasers of multiple properties to pay stamp duty land tax based on the average price per dwelling. 

Abolishing Multiple Dwellings Relief will likely affect the buy-to-let sector and large portfolio landlords most heavily. 

Furnished Holiday Lettings tax abolished 

The Spring Budget also announced that favourable tax rules around Furnished Holiday Lettings will be abolished in April 2025. Furnished Holiday Lettings Tax currently offers tax advantages to those who let out properties as a holiday home. For a standard residential lettings business, tax relief for finance costs (such as interest on a mortgage) is determined via a reduction in the person's income tax liability, capped at 20%. For Furnished Holiday Lettings, the finance costs may be deducted when calculating the individual's profits. This could save income tax at a higher rate (eg, 45% for those paying an additional rate). Around 127,000 properties in the UK are currently registered under this scheme. 

Abolishing the scheme means that holiday landlords could lose an average of £2,835. The change is likely to push those with short-term lets into longer-term lettings or encourage them to sell their properties entirely. 

Empty Property Relief reset period extended 

The Empty Property Relief reset period has been extended from six weeks to thirteen weeks from April 2024. This means that a business premises must have been reoccupied for at least thirteen weeks to qualify for another period of relief. This is designed to prevent 'box shifting' where landlords repeatedly occupy properties for short periods of time in order to claim more Empty Property Relief. 

Commitment to build one million homes this parliament 

During the Spring Budget 2024 announcement, Jeremy Hunt reasserted the Conservative Party's commitment to building one million homes by the end of this Parliament, and allocated £242 million to the building of 8,000 new houses in Barking Riverside and Canary Wharf. Specific projects have been already been planned in Blackpool, Liverpool and Sheffield.

Other announcements that may affect the sector 

The Spring Budget also included several other announcements that, while not directly related to the property sector, could have a significant impact on property businesses and individual professionals operating within the industry. 

Cuts to National Insurance contribution

The National Insurance contribution rate has been reduced by 2p from 10% to 8% of pay. This will impact employees and employers alike, no matter their sector.

VAT threshold increase 

The government has revealed plans to increase the VAT registration threshold from £85,000 to £90,000. Before this, the threshold has remained unchanged since 2017. This should have a positive impact on smaller businesses, including independent lettings companies.

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