In a delightful twist revealed in the recent Spring statement presented to parliament on the 6th March, landlords and second homeowners received an unexpected boost from Chancellor Jeremy Hunt. The higher rate of Capital Gains Tax was reduced from 28% to a more manageable 24%. This move is part of a broader strategy aimed at invigorating the property market.
The government’s rationale behind this tax cut is to motivate landlords and those owning additional properties to consider selling. The ultimate goal? To increase the housing stock available for purchase, particularly benefiting first-time buyers and those eager to climb the property ladder. Chancellor Hunt shared with MPs that lowering the tax rate from 28% would not only make property transactions more appealing but also potentially increase government revenues through the higher volume of sales.
In another significant announcement from what’s been dubbed the ‘Budget for Long Term Growth,’ the Chancellor decided to phase out the Furnished Holiday Lettings tax regime by April 2025. This scheme currently offers tax advantages for the costs related to furnishing holiday rentals—benefits that aren’t extended to private rental properties. The idea is to discourage the preference for short-term holiday rentals over offering long-term residential homes.
Furthermore, Chancellor Hunt addressed the planned removal of multiple dwellings relief. This relief, initially aimed at supporting investments in the private rental sector (PRS), hasn’t quite hit its mark according to the government’s findings. It has been subject to misuse and will no longer be available, with a few exceptions. Notably, transactions with contracts exchanged on or before March 6th will still enjoy the benefits of this relief, and so will purchases completed before June 1st.
These changes represent a concerted effort to rebalance the property market, making it more accessible and equitable for a wider range of buyers, while also ensuring fairness in the tax system.
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