Chancellor Jeremy Hunt’s 2024 Spring Budget announcement has been met with much disappointment and frustration. From Stamp Duty to Mortgages, the budget has left most worse off, from first-time buyers to renters and landlords. Here were the announcements as related to the property market.
Stamp Duty Tax Relief Looks Likely to End
Stamp duty, a tax paid on property purchases, has long been a subject of debate in the housing market. The stamp duty tax relief was originally aimed at stimulating the property market by making it more accessible, especially for first-time buyers and those at the lower end of the market, who struggle to save large deposits. Stamp Duty is a significant expense for buyers. It was hoped that the £625,000 Stamp Duty threshold for first-time buyers, currently in place until Spring 2025, would be made permanent, but there was no such announcement. This means that around 30% more first-time buyers will be liable for Stamp Duty from March 2025.
No 99% Mortgage Scheme Mentioned
It was also hoped that there would be some mention of a 99% mortgage scheme, but that appears to have been shelved. In fact the word “mortgage” didn’t even appear in the 98-page budget, despite being a hot topic. This initiative would have aided first-time buyers who struggle to save for a large deposit, a common barrier to homeownership. By allowing buyers to purchase a home with just a 1% deposit, the government would have been able to increase homeownership rates among younger people and those with lower incomes. Although it was disappointing that the 99% mortgage didn’t get a mention, there are always questions about affordability with such a scheme and the risk of negative equity, especially in a fluctuating market.
Removal of Tax Relief for Short-Term Holiday Lets
This move is likely aimed at addressing concerns over the impact of short-term lets on local housing markets and communities. By removing tax relief, the government seems to be encouraging investments in longer-term residential properties over holiday lets, which could have a stabilising effect on local housing markets. This will potentially increase the number of homes available to rent in tourist hotspots, which are currently short of long-term rental properties. But this could also make the holiday let business less financially attractive, leading to a reduction in holiday lettings available, thus impacting local tourism.
The End of Multiple Dwellings Stamp Duty Relief
The decision to end the multiple dwellings stamp duty relief is significant for investors and landlords. This relief previously allowed buyers of multiple dwellings to pay reduced rates of stamp duty, an incentive for investment in the housing sector. Its removal could lead to a decrease in large-scale property investments, potentially impacting the supply side of the housing market.
No Commitment to Building New Homes
The UK is in desperate need of new homes, and the planning system is in desperate need of reform in order to increase the supply. What we need is more funding for social and affordable homes, as well as investment in the housing infrastructure to make more homes available.
Reduction in Capital Gains Tax
Many people have been rather unimpressed by the Chancellor’s decision to reduce the rate of Capital Gains Tax on higher rate taxpayers selling residential property. Surely it would have been more beneficial to cut the 3% Stamp Duty surcharge on second and subsequent property purchases? This would have encouraged landlords to invest in more properties, increasing much-needed supply in the rental sector, which would have helped drive down the astronomical rents people are having to pay.
In conclusion, there were absolutely no words of encouragement in this year’s Spring Budget, with no attempt to fix anything that is wrong with the UK property market, no investment in the future, and practically no good news for anyone involved.