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In the wake of the Spring Budget announced today by Chancellor Jeremy Hunt, we look at the impact of today’s announcement will have on the property and mortgage sector amidst the governments promises of “long-term growth.”
Key Announcements & Their Implications
Despite optimism leading up to the announcement, the Budget has not resonated well across all sectors, particularly within the property market where some expected a boost for first time buyers and a bigger onus on housing supply. We look at the key points below:
Capital Gains Tax Cut for Property
The Chancellor has opted to reduce the higher rate of property capital gains tax from 28% to 24%. This significant decision is seen as a strategic move to invigorate the market by increasing transaction volumes. However, whether this will stimulate the desired level of activity remains to be seen.
Stamp Duty Land Tax Relief Abolished for Multiple Dwellings
Jeremy Hunt said stamp duty relief for people who purchase more than one dwelling in a single transaction was intended to support investment in the private rental sector.
However, an external evaluation found “no strong evidence that it had done so and that it was being regularly abused” and as a result, the chancellor announced that he was going to abolish the relief.
Change in Tax Breaks for Second Home Owners
In a bid to shift the focus back to long-term tenancies, the Chancellor plans to eliminate tax breaks that have made it more lucrative for second home owners to opt for holiday lets over offering long-term rentals. This decision could potentially reshape the landscape for both second home owners and long-term renters.
Non-dom Status Abolished
Chancellor Jeremy Hunt confirmed an overhaul of rules for people with non-domiciled status who do not have to pay taxes to the UK on money they make in another country. Mr Hunt said that, from April 2025, new arrivals to the UK would not pay any tax on foreign income and gains for their first four years of UK residency, but after that, those who continued to live in the UK would pay the same tax as other UK residents.
Withdrawal of the rumoured 99% Mortgage Scheme
Addressing concerns about soaring house prices and the affordability of mortgages, Chancellor Hunt has stepped back from introducing the anticipated 99% mortgage scheme. This reversal comes amid speculation of the scheme’s introduction as a measure to gain voter favour in the forthcoming general election.
Housing Announcements: Limited Focus
The Budget’s focus on housing was notably minimal, with announcements including a £242 million investment for the development of 8,000 homes in Barking Riverside and Canary Wharf, alongside a £20 million community-led housing scheme. These initiatives, while welcome, leave much unaddressed in terms of broader access to the housing market.
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Given the nature of the market, borrowers should act as quickly as possible to secure a suitable deal. Whether you’re considering buying a new property, remortgaging, or just seeking advice on the best course of action in this volatile market, our team is here to assist you.
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