Understanding the 2024 Spring Budget: Implications for the Rental Sector

19th Mar 2024
Samantha Smith
Understanding the 2024 Spring Budget: Implications for the Rental Sector - Thornley Groves

The Spring Budget is a seminal event punctuating the UK financial calendar, offering a view of the nation's fiscal health. It's a pivotal moment when the Chancellor of the Exchequer stands before the nation to map out government expenditures, revenue collection strategies, and economic forecasts.

On the 6th of March, 2024, the Chancellor unfurled what was presumably the final financial account under the steer of the present Government - a precursor to the forthcoming General Election expected by the year's end. Here's an overview of the key announcements and what it means for you as a landlord. 

Capital Gains Tax Reductions and the Buy-to-Let Landscape

In a turn of events that caught many off-guard, the Chancellor delineated a dip in property Capital Gains Tax from 28% to 24%. This tax pertains to the profitable turnover of non-primary residences, such as buy-to-lets, commercial estates, or inheritance properties. The BBC's Simon Jack labelled the move as rather "unexpected," suggesting that lower taxes could heighten property dealings, thus boosting overall tax revenues.

Of equal note is eradicating the multiple dwellings relief (MDR). MDR previously afforded purchasers of multiple residential units a tax relief - an incentive to spur property investment. This latest amendment is anticipated to have a pronounced impact, particularly on larger-scale landlords.

Navigating Tax Revisions for Holiday Homes and Multiple Dwellings

One consequential revision that emerged was abolishing the favourable tax treatment for furnished holiday homes. With the draped curtain over the preferred standing of these holiday lodgings, average financial drawbacks tally up to approximately £2,835. The Chancellor's gambit aims to rectify the market distortion - a shortage of rental homes available to locals.

Noteworthy is the affected demographics - England and Wales' holiday hotspots. Echoing the change, the Welsh Government decreed a new licensing strategy in 2023 to tighten regulations around short-term accommodations.

The Housing Commitment Reiterated in the Spring Budget

The Budget re-affirmed an ambitious goal - a commitment to build a million homes before this parliamentary session concludes, dedicating £242 million towards housing. The announcement is the newest chapter in the Government's evolving narrative on housing targets, a story of frequent adjustments and retreats on previously declared projections.

With National Insurance cuts poised to leave more money in people's pockets, there is cautious optimism that the sector will see a corresponding boost in demand. Yet, the long-term success of these policies depends on diligent execution and responsive adjustments in line with the shifting economic landscape.

As the current Government approaches the end of its term with these fiscal decisions, it sets the stage not only for the upcoming General Election but also for the future of the rental sector. Stakeholders should remain vigilant, adaptable, and engaged with policy developments to navigate the evolving terrain of the UK's property market.