Spring Budget: Chancellor scraps Multiple Dwellings Relief from June 2024

The Chancellor Jeremy Hunt has announced to abolish Multiple Dwellings Relief (MDR) with effect from 1st June 2024. This change will come into effect for transactions which complete, or which substantially perform, on or after 1st June 2024.

Also in the budget, the chancellor announced that the higher rate of property capital gains tax is to be reduced from 28% to 24% – suggesting this move is predicated to increase revenues as there will be “more transactions”.

He also mentioned that Multiple Dwellings Relief, intended to support investment in the private rented sector, and is instead being regularly abused, is to be abolished.

Additionally. the chancellor says he will scrap tax breaks which make it more profitable for second home owners to let out their properties to holiday makers rather than to long-term tenants to rent. Commenting on the Budget, Roger Mortlock, CPRE chief executive, said:

“The government’s plan to scrap tax breaks for short-term lets is a step in the right direction. But these changes should be applied to all second homes – a major cause of the rural housing affordability crisis. 

Air-BnB-style short-term lets have led to ghost towns and villages in some parts of the country, driving people out of the communities that depend on them. A secure and healthy home is a foundation for a decent life and one that many people in rural communities are being denied.

Much more is needed to fix a crisis that is tearing the soul out of rural communities. We call on the government to redefine “affordable” in line with local incomes, not market rates, set and deliver ambitious targets for new, genuinely affordable and social-rent rural housing, and urgently bring forward its new regulations on short-term lets.”

What’s more, Richard Donnell, Executive Director at Zoopla said that the budget marks another “missed opportunity” to take action on boosting supply and mortgage availability in the housing market. He continued:

“The consensus is that the country needs more new homes. Supply has increased but this has stalled. There is a need for widespread reform of the planning system to encourage supply. More funding is needed for social and affordable homes, and housing infrastructure investment to unlock supply.

The Government should also look to support the emergence of a long-term fixed rate mortgage market as a matter of urgency. This will help more young people with smaller deposits access home ownership – particularly in southern England where deposit size is the biggest barrier to getting on the housing ladder.

Another missed opportunity is the decision not to make the £625,000 threshold for first-time buyer relief permanent. This means 30% more first-time buyers will be liable to pay full stamp duty from March next year.”

Commenting on housing policy in the Spring Budget, Joe Pepper, Chief Executive Officer at PEXA UK, said:  

“Housing will inevitability be a key battleground in the upcoming election, so a flagship policy to turbocharge the market’s recovery was conspicuous by its absence from this Budget. Reducing capital gains tax, and tinkering with tax reliefs for second homes may stimulate some activity at the margins, but it won’t move the dial meaningfully.

Not only did we need measures to boost affordability and drive transactions in a market characterised by economic uncertainty and high rates, we also desperately needed to see commitment to helping reform in the infrastructure that supports it. Without investing in any long-term fixes, the government, incumbent or otherwise, will see reduced returns on its housing market investment – and a lost opportunity to boost UK productivity.”

Rob Houghton, founder and CEO of reallymoving said that this is a “very disappointing Budget for the property sector”. He continued:

“This is a very disappointing Budget for the property sector. Making the £425,000 Stamp Duty threshold permanent for First Time Buyers was surely an obvious move, but despite the serious challenges they face in terms of affordability and upfront costs, needing to raise over £25,500 on average to buy a first home, no helping hand has been offered to them and the higher threshold remains in place temporarily until next spring.

The other major issue that has been completely ignored is the dire state of housing supply. Tackling the shortage of new homes, including social housing, would filter through to lower house price inflation for the rest of the market. With net migration into the UK of 670,000 in 2023, increasing supply is the only way to make home ownership more affordable in the long term.

Cutting Capital Gains Tax will encourage landlords who have been sitting on the fence to sell, but with the supply of rental homes so limited and record high rents, this is going to make life even more difficult for tenants.”

One Response

  1. Bad News ,, reduce the stamp duty , in fact take it away ,, Stops people buying and moving on ,

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