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    Scrapping Tax Breaks for

    Short-term Lets

    In tourist locations, long-term rental options are limited. Therefore, to increase the availability of long-term rental accommodation, Jeremy Hunt announced the removal of tax relief for short-term furnished holiday lets. This move aims to align short-term and long-term lets for tax purposes and will be effective from April 2025. This will eventually improve the supply-demand imbalance across the market, predominantly in tourist spots.

    Currently, short-term let owners can claim capital gains tax reliefs, as their profits can count as earnings for pension purposes. But from April 2025, the tax advantage for landlords who let short-term properties will be eliminated. Making it easier for landlords to offer long-term tenancies, which encourages more landlords to do so. In simple terms, there will be no tax advantage on short-term lets over long-term tenancies. 

    Stamp Duty

    End of Multiple Dwellings Stamp Duty Relief

    The Multiple Dwellings Relief (MDR) was introduced to encourage investment in the private rented sector. However, due to its misuse and the lack of evidence that this relief was encouraging more people to invest, the government will stop this from 1st June 2024. This means stamp duty will have to be paid on each property and it will be at the same rate that would apply if the dwellings were purchased separately in a different transaction.

    Stamp Duty Fees

    Many home buyers have expressed their concerns about the lofty stamp duty fees and were hoping for permanent changes to the existing thresholds. However, it is unfortunate that the Budget speech by Chancellor Hunt did not cover this issue, and the current temporary thresholds are set to expire in Spring 2025. As a result, home buyers may not receive any SDLT relief beyond the current deadline, as the temporary thresholds were not granted longevity.

    Our stamp duty calculator can provide insights into what you will be expected to pay on your property. Remember, the current thresholds that were effective since September 2022 will remain in place until March 2025.

    Reducing Rates

    Reduction in Capital Gains Tax

    The Chancellor has also announced in the Spring Budget that there will be a reduction in capital gains tax. This will benefit individuals with property portfolios.

    The reduction of the rate of capital gains tax has gone down from 28% to 24%, this change was made hoping to encourage more property transactions. This means investors will not pay as much tax on the gains they make leading to a larger profit margin. The move aims to encourage more people to invest in property with the promise they can keep more of their returns.

    Inflation Declining

    House prices usually stagnate when inflation increases. Due to people not being able to afford property, the competition is not as strong. However, inflation has decreased to 4% and the government is still supporting the Bank of England to keep reducing this. It is predicted we will reach the government’s target of 2% in only 2 months. Due to this, wages are rising, the OBR now expects living standards to rise by 0.8%. This will lead to more people being able to step into the property market again. As competition increases, property prices will rise, benefitting investors.

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