Spring Budget 2024: what it means for the local property sector

Property owners, landlords and investors in Portsmouth and Southsea will no doubt be digesting the various measures announced in the Budget.

There were three specific property tax changes unveiled by the Chancellor, but in reality they will only affect a comparatively small number of property players.

Holiday lets

First, let’s consider the abolition of the tax advantage owners and landlords have enjoyed on short-term furnished holiday lets.

Up to now, owners enjoyed a more favourable tax regime, through loan interest relief, for such lets compared to properties for long-term rent.

Equalising the tax treatment is intended to free up more housing stock, especially in tourist areas where homes available for long-term rent can be hard to find for local people.

The jury’s out on whether or not this will be a sufficiently tempting step to ensure current landlords remain in the private rented sector (PRS) while encouraging new entrants.

This legislation isn’t due to come into place until April 2025 and we will be interested to see how any transitional rules work in the meantime.

Stamp duty

Just as the holiday let change was predicted ahead of the Budget, so was the Chancellor’s move to abolish stamp duty relief on multiple dwellings.

This relief was aimed at encouraging investment in the PRS. The idea was that if landlords knew they would be paying lower stamp duty they might invest in more properties they could rent out long-term.

However, after a review into the existing legislation found that in many cases the relief isn’t being used in the way intended, the government have decided to abolish it.

Clearly, some landlords, owners and investors with portfolios of properties will be disappointed by either or both of these tax changes.

Capital Gains

On the other hand, they are likely to welcome the 4% cut in higher-rate Capital Gain Tax (CGT) on residential property sales, falling from 28% to 24%.

Again, we will have to bide our time to see whether or not this will stimulate more transactions and improve the market through more investment and by encouraging landlords and owners of second homes to sell properties.

Overall, we believe the Chancellor’s announcements on CGT, multi-property stamp duty and furnished holiday lets are fairly minor when set against the wider economic factors at play in the residential property market and will probably not lead to any significant shift in activity.

Expert advice

As ever, those anticipating a house purchase, sale, investment or rental agreement must take care.

The key message is to ensure you take well-researched advice from property experts.

We’re always here if you want to have a chat about the financial side of homebuying, selling or renting.

Most homeowners in Portsmouth and Southsea can at least be cheered that relative to their mortgages, the underlying value of their asset is still generally on the up.

For more information, we highlight a range of essential indicators about the local property scene on our website that you might find useful.

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