Chancellor Jeremy Hunt’s Spring Budget statement this year turned out to be something of a curate’s egg as far as the property market is concerned – there were good bits and bad bits.
On the positive side, the heavily predicted further cut in National Insurance was implemented and the Chancellor reduced the rate from 10% to 8% - worth about £450 to someone earning £35,000 a year and something that will help budding buyers struggling with lender affordability criteria.
There was more of the same when he announced freezes on fuel and alcohol duty and a reform of child benefit. He raised the threshold of repayment from £50,000 to £60,000, taking 170,000 families out of having to pay the benefit back and the threshold for full repayment is to rise from £60,000 to £80,000 in April. This will mean a saving of around £1,300 for nearly half a million families.
No widespread reform
Mr Hunt also announced better economic news in general with growth now forecast at 0.8% this year and 1.9% in 2025, according to the Office of Budget Responsibility. And he said the all-important inflation rate is due to fall below 2% in a few months – perhaps signalling a drop in interest rates which will be music to the ears of mortgage holders and those looking to buy.
But hopes that there would be a series of specific measures to help first time buyers (like the proposed 99% mortgages) were dashed and there was no widespread reform of Stamp Duty Land Tax – something called for by many industry commentators.
On the lettings side, both landlords and tenants will benefit from the measures to ease the tax burden and the promise of lower interest rates later in the year will be good news for holders of Buy to Let mortgages.
The Chancellor also announced a cut in Capital Gains Tax from 28% to 24% - which could persuade some landlords to release some properties for sale while at the same time putting more pressure on the supply of homes for rent.
Removes the advantage
But he abolished the SDLT multiple homes relief which is expected to hit the Build To Rent sector particularly hard and may affect some traditional landlords, too.
And landlords with short-term lets also suffered when the Chancellor announced the abolition of the Furnished Holiday Lettings Tax regime. This removes the advantage of short-term holiday let landlords over their long-term rental counterparts from April 2025. The Chancellor said he is ‘concerned’ that the current regime was creating a ‘distortion’ which resulted in properties not being available to local communities in areas popular with holidaymakers.
These changes in tax and regulation might mean that there will be more short-term lets moving into the long-term market but the changes in CGT may well result in more landlords selling up.
The measures announced by the Chancellor are unlikely to impact the overall number of rental properties across the UK. And while there have been changes which will affect the sector, there was no specific action to increase the number of both social and privately rented properties throughout the country and rents, which have risen dramatically in recent years, are likely to continue to rise this year.
For more information on how Kings Group can assist you on your letting or sales journey, please contact one of our branches in Essex, London or Hertfordshire today. We also offer a free and instant online valuation to give you an idea of how much your home could be worth on the current market.
