Key Takeaways from the 2024 Spring Budget – A Focus on Property and Mortgages

Budget 2024 property

You’re likely eager to ascertain what the UK’s 2024 Spring Budget policies mean for you as an owner or potential owner of property. We shed light on the key points, with a focus on property, within the 2024 spring budget, the changes and their potential impact.

1. Reduction in Property Capital Gains Tax

The 2024 Spring Budget announced by Chancellor, Jeremy Hunt indicates that the higher rate of capital gains tax on property is to be reduced from 28% to 24%. Predictions suggest this move will trigger increased revenue due to more transactions.

Our take: This comes as a relief to many landlords who have felt pressured to sell due to the section 24 rules or the “George Osborne tax”. With this new reform, landlords can now reassess their portfolios, taking into consideration the overall profitability.

2. Abolishment of Stamp Duty Relief

Hunt also announced the abolishment of stamp duty relief for multiple dwellings, stating it was frequently misused. A key factor to note is Property transactions with contracts that were exchanged on or before 6 March 2024 will continue to benefit from the relief regardless of when they complete, as will any other purchases that are completed before 1 June 2024.

Our take: This development might frustrate investors engaged in legitimate multi-dwelling transactions like block flats or large estates. Perhaps a more targeted reform would have dealt with annexes which we believe was the focus of this change. Use our stamp duty calculator to factor in the new costs.

3. Abolishment of Furnished Holiday Lettings Regime

The furnished holiday lettings regime has also been scrapped. This regime was a tax break benefit that made it more profitable for second-home owners and investors to rent out their properties as holiday homes. This will take effect from April 2025 and draft legislation will be published in due course

Our take: The details of this new policy will be crucial for understanding its effect. If the loss of the ability to offset interest costs is included, it might significantly impact the profitability of holiday let investments, as suggested by BBC’s full report on the budget. The growth in this sector may not have been as significant if it had not been for section 24, which has exacerbated the shortage of long term rental property. Exactly what this budget announcement is designed to solve.

4. The Predicted Fall of Inflation in 2024 and 2025

The Office for Budget Responsibility (OBR) forecasts a significant drop in inflation in 2024 and 2025. With an average CPI inflation of 2.2% expected in 2024 and a further drop to 1.5% in 2025. This lower inflation forecast is driven by larger anticipated falls in global energy prices and weaker domestically generated inflation. Check the full statement from the OBR on inflation and growth in the UK.

Our take: With these reductions, it’s likely the Bank of England will reduce the base rate. We predict a base rate beginning with a 3 in 2025, which will certainly make for interesting times in the mortgage industry.

Conclusion: Navigating the New Landscape

2024’s Spring budget holds notable changes in the property sector. While we have highlighted the key takeaways here, each individual or business’s situation may require a flexible approach to optimally navigate these changes. It is essential to seek tailored advice for your unique circumstances.

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