Spring Budget 2024: Implications For Property Investors And Developers

Spring Budget 2024: Implications For Property Investors And Developers

The Spring Budget of 2024 has introduced several pivotal changes that will significantly impact property investors and developers across the UK. From the abolition of tax relief on mortgage interest for furnished holiday lettings to the end of multiple dwellings relief (MDR) and adjustments to Capital Gains Tax (CGT), these measures are poised to reshape the landscape of property investment and development. Here’s a closer look at what these changes entail and their implications for the sector.

Abolition of Tax Relief on Mortgage Interest for Furnished Holiday Lettings

One of the most significant announcements is the cessation of tax relief on mortgage interest payments for properties owned in an individual’s name and let out as furnished holiday lettings. Previously, owners could claim mortgage interest as an expense against their tax, provided the property was available for letting for 210 days a year. This move will notably increase the tax burden for owners of furnished holiday lettings, affecting their profitability and potentially deterring new investors from entering this market segment.

End of Multiple Dwellings Relief

The budget also announced the abolition of Multiple Dwellings Relief (MDR) on Stamp Duty. This relief allowed investors buying more than one property in a single transaction to enjoy a tax advantage, which facilitated the acquisition of blocks of flats or multiple properties at a reduced tax rate. The scrapping of MDR removes a significant incentive for large-scale residential investments, potentially slowing down the pace of such transactions and impacting the strategy of property developers and investors alike.

So for example if you bought a block of Two Flats for £400,000 then because it’s two Flats you would split the £400,000 in two and you would apply stamp Duty as though you were buying two lots of 200k properties.

Now that gave property investors and developers a lot of room to play with but that whole allowance has been scrapped all together. Nothing was said about commercial property
relief so I assume that still stands so that’s where if you buy six or more Residential Properties on on the same transaction then that is considered a non-residential transaction and Commercial rate Supply so that still remains but multi dwellings relief scrapped.

Changes to Capital Gains Tax (CGT)

On a brighter note, the higher rate of CGT for residential property gains is being reduced from 28% to 24%, effective from 6 April 2024. However, the rates for gains in respect of carried interest remain unchanged. This reduction in CGT could incentivize the sale and turnover of investment properties, potentially increasing the fluidity of the UK’s residential property market.

Continued Capital Allowances and VAT Threshold Increase

The budget confirms the continuation of 100% capital allowances for expenditure on plant and machinery, a measure that supports business investment in tangible assets. Additionally, the VAT registration threshold for businesses has been increased from £85,000 to £90,000 per annum, providing slight relief for small business owners, including those in the property sector.

Unaddressed Issues and Missed Opportunities

Despite these changes, the budget has left several critical areas unaddressed. Notably, there was no mention of reforms to business rates or the introduction of anticipated measures such as the 99% mortgages or the consultation on permitted development rights for splitting single dwellings.

Moreover, the budget failed to introduce incentives for renovations and extensions, such as a reduced VAT rate, which could have spurred significant economic activity and job creation in the construction sector. For example what he could have done was had a reduced flat rate of 5% VAT on householder Renovations and extensions. The government has put out consultations on a whole bunch of householder permitted development rights allowing people to do lofts and side extensions, rear extensions and all of that , but that is still payable at 20%. If you’re building a brand new house of course you don’t pay any vat at all, it’s 0% but there is a 20% vat rate if you want to renovate and bring up to modern standards an existing dwelling.

It should be harmonised. It should be a level playing field with new build properties. It’s been estimated that reducing that vat level to 5% on refurbs would boost the economy by 50 billion pounds and create 300,000 jobs in the construction sector.

Similarly,another thing that always encourages growth is people basically moving around moving houses trading up, trading down. Interest rates have gone up quite a bit so the cost of moving is high and particularly with SDLT. The retention of the 3% Stamp Duty Land Tax (SDLT) surcharge on additional properties continues to discourage investment in the private rented sector, at a time when the UK faces a critical shortage of rental stock.

Now we’re experiencing drops in rental stock particularly in high value areas and all over the country and that is pushing up rents. Now one of the reasons for that is because if anyone wants to buy a property in order to let out then they pay an additional 3% SDLT surcharge. Now some modelling done by capital on economics estimated that if this 3% surcharge was scrapped it would result in 900,000 new private rented sector homes added to the UK housing stock and a boost to the UK treasury of 10 billion quid in extra Revenue.

These omissions represent missed opportunities to stimulate growth and alleviate pressing issues within the property market.


The Spring Budget of 2024 brings forth a mixed bag of measures for property investors and developers. While the reduction in CGT offers some relief, the abolition of mortgage interest relief for furnished holiday lettings and MDR, coupled with the lack of significant positive reforms, presents new challenges. Property investors and developers must navigate these changes carefully, recalibrating their strategies to adapt to this evolving fiscal landscape. As the property market reacts to these adjustments, the long-term implications for investment, development, and the broader housing market remain to be seen.

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