The chancellor Jeremy Hunt delivered his spring budget on March 6th. Now seems like a good time to look back at what that means for the property market. The changes that will have the most direct impact on the property market are outlined below.
Stamp duty
The big one here was the removal of MDR or multiple dwellings relief. MDR enabled a buyer of two or more residential properties in a single transaction, or linked transactions, to pay SDLT based on the average price of each dwelling. The government felt this was being abused so have removed it.
Capital Gains Tax
The higher rate of capital gains tax has been reduced from 28% to 24% in a slightly surprising move. The logic put forward was that the reduction would ultimately lead to more transactions and therefore a bigger take for the treasury.
Short Term Lettings
First the chancellor set out his plans to abolish the furnished holiday let tax regime. The law had allowed landlords to deduct the full cost of mortgage interest payments from their rental income and pay lower capital gains tax when selling.
The second was to create a mandatory register for short term lets so that local authorities have up to date information on STL’s in their areas. Under the reforms councils will be given greater power to control short-term lets by making them subject to the planning process.
While the reduction in capital gains tax is to be applauded, the Government have shown that they are not keen to intervene with policies that would boost the supply of much needed rental properties. More clearly needs to be done to help support landlords and encourage SME developers to build the houses and apartments so badly needed in our towns and cities.
