Spring Budget 2024: Five things letting agents and landlords need to know
The Chancellor of the Exchequer, Jeremy Hunt, has presented the Spring Budget for 2024. Here’s the relevant breakdown for property professionals.
The Spring Budget is one of two yearly announcements on the state of the UK economy. It gives the Chancellor of the Exchequer the chance to present an overview of government spending, revenue gathering, and official forecasts for the economy.
On 6 March 2024, the Chancellor gave what was likely the last budget announcement from the current UK government. This is because a General Election will likely occur before the end of 2024.
Here are the top key takeaways from the Spring Budget that letting agents and landlords should note:
- Tax cuts for holiday homes and multiple dwellings to affect landlords
- Capital Gains Tax cut to affect landlords and buy-to-let market
- Commitment to build million homes this parliament
- Small agencies may benefit from VAT threshold increase
- Other announcements that may affect individuals in PRS
Tax cuts for holiday homes and multiple dwellings to affect landlords
In order to help deliver personal tax cuts, the Chancellor has abolished the furnished holiday lettings tax regime.
This change means that holiday landlords could lose an average of £2,835. The aim for this clampdown would be, according to Jeremy Hunt, to avoid the “distortion of not enough properties to rent for local people.”
Holiday homes are particularly prominent in some parts of England and Wales. In 2023, the Welsh Government announced a new licensing scheme for holiday lets. This scheme means all visitor accommodation will need to meet certain requirements in order to be a holiday let property.
Oli Sherlock, Managing Director of Insurance at Goodlord, responded to the news, stating: “This is a sensible loophole to close and will help level up the buy-to-let sector and, hopefully, unlock more full time tenancy stock in tourist hubs, major cities, and coastal communities.”
Capital Gains Tax cut to affect landlords and buy-to-let market
In the 2024 Spring Budget the Chancellor announced that the higher rate of property Capital Gains Tax will reduce from 28% to 24%.
Capital Gains Tax applies to properties when a person makes a profit on selling a property that is not their main home. Examples include when selling buy-to-let properties, business premises, land, and inherited properties.
These tax rules meant that landlords could claim Capital Gains Tax relief, and count profits from the rent for pension purposes.
Simon Jack, Business Editor at the BBC called this move a “surprise”., He further stated that the Chancellor expects that “the lower tax rates will result in more transactions, leading to more tax revenue.”
The Spring Budget also abolished multiple dwellings relief (MDR). MDR is available for people who buy more than one residential property at a time. Originally introduced to minimise any barriers when investing into property, it’s likely this relief will affect larger landlords and the buy-to-let sector the most.
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Commitment to build million homes this parliament
In the Spring Budget, Jeremy Hunt re-affirmed the Conservative party’s commitment to build one million homes by the end of the Parliament - allocating £242 million to new house building. This includes specific projects in the Canary Wharf area of London, as well as in Blackpool, Sheffield, Liverpool, and Cambridge.
House building targets have changed multiple times over recent years. In 2021, the Conservative Party set a target to build 300,000 homes a year by the mid-2020s.
However, Housing Secretary Michael Gove backtracked on this in December 2022, stating these targets were “advisory”. Then again in 2023, the Government restated its intention to build one million homes by the end of the Parliament.
Small agencies may benefit from VAT threshold increase
The Chancellor announced plans to increase the VAT registration threshold from £85,000 to £90,000. This threshold, which had remained unchanged since 2017, would be a popular move with smaller business owners - such as small, independent agencies.
Other announcements that may affect individual landlords, letting agents, and tenants
The Spring Budget announced other measures that will affect property professionals. This includes:
- Cuts to National Insurance. The contribution rate has been reduced by 2p again - from 10% to 8% of pay. This change is intended to reduce the historically high tax burden, and will benefit employers and employees, including agents, landlords, and tenants alike.
- Fuel duty freeze. Fuel duty will stay at 53p per litre, saving the average car driver - according to the Chancellor - around £50 per year. Letting agents who rely on driving to viewings may benefit from this the most.
- No huge changes for energy bills expected. The Chancellor announced intentions to focus on clean energy, with 25% of homes running on nuclear energy by 2050. However, there wasn’t any specific answer to the numerous calls to assist struggling households with their bills.
This article is intended as a guide only, and does not constitute legal advice. For more information, visit gov.uk.
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