The Spring Budget 2024 has left many desiring more substantial support for home buyers and mortgage seekers, despite introducing a few tax modifications that might slightly affect the market.

Essential Highlights:

• The Chancellor has reduced capital gains tax rates on property sales.
• The tax advantages for holiday home rentals will be eliminated.
• The government has decided against making the elevated stamp duty threshold a permanent fixture.

The recent Spring Budget was an opportunity for the government to gain favour with the public before the upcoming general election. However, it failed to meet the expectations of younger and less affluent voters, particularly concerning affordable housing and mortgage accessibility in the UK.

Despite speculation about a potential 99% mortgage scheme to assist first-time buyers with minimal deposits, the plan was ultimately abandoned. This scheme was seen as a way to help newcomers to the housing market, though it also raised concerns about the risk of negative equity should property values decline.

There was hope that penalties for early withdrawal from Lifetime ISAs would be reduced and that the home value limit for ISA purchases would be raised, but these changes were not implemented.

Tax Adjustments with Potential Market Impact:

Capital Gains Tax Reduction: The tax on profits from selling non-primary residences for higher-rate taxpayers will decrease from 28% to 24% in April, possibly spurring property sales and increasing home availability. This change benefits wealthy property owners by allowing them to retain a larger portion of their sales profits.

Elimination of Holiday Let Tax Breaks: Starting in April, the tax benefits for furnished holiday let owners will be discontinued, potentially making holiday lets less appealing and increasing the availability of long-term rentals or homes for purchase by locals.

Stamp Duty Adjustment: The budget also introduces a change to stamp duty, ending the relief for purchasing multiple properties simultaneously starting in June. This measure aims to discourage bulk property purchases that don't contribute to the private rental sector.

Expert Insight:

Richard Donnell, who is the Executive Director of Research at Zoopla, comments on the changes, particularly the impact on holiday lets and the broader market. He notes that while some effects may be felt in tourist areas, the overall market impact in these locales may be minimal. Donnell highlights the continued challenge of balancing investment opportunities with the accessibility for first-time buyers.

Overall Viewpoint:

The Budget is seen as another missed chance to address crucial housing market issues, such as supply enhancement and mortgage availability. The need for comprehensive planning system reform, increased funding for social and affordable housing, and investment in housing infrastructure is emphasised. Additionally, the government's inaction on supporting long-term fixed-rate mortgages and making the first-time buyer stamp duty relief threshold permanent is critiqued for potentially hindering home ownership access, especially in regions where deposit requirements are most prohibitive.