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Spring Budget 2024 Recap: Property and Mortgages
As the Spring Budget unfolded yesterday, the Chancellor delivered several significant announcements affecting the property and mortgage market, including some anticipated changes alongside a few surprises. We delve into our 5 takeaways from the Spring Budget and the potential implications for the property and mortgage market.
If you would like to discuss your mortgage options and how the Budget could potentially impact your mortgage, you can speak to one of our consultants on 0800 980 8777, or via email at info@privatefinance.co.uk
1. Changes to National Insurance Contributions (NIC)
Following the Autumn Statement, an additional cut was made to National Insurance, effective April 6th, 2024. Class 1 employed NIC is being reduced from 10% to 8% and Class 4 NIC from 8% to 6%. This reduction offers a slight boost to mortgage affordability. Although not groundbreaking, this move could provide borrowers with more flexibility to maximise borrowing amounts due to increased net income.
2. Capital Gains Tax (CGT)
The reduction in the higher rate of Capital Gains Tax on property from 28% to 24% might encourage investors to sell their properties. This could potentially benefit first-time buyers however, the impact may be limited to only those investors on the edge of selling.
3. Abolishment of Multiple Dwellings Relief (MDR)
MDR previously provided a lower rate of Stamp Duty where two or more dwellings were acquired under a single transaction. The change, effective from June 2024, may pose challenges for investors, urging strategic adaptation.
4. Abolishment of Furnished Holiday Lets (FHL) Regime
The Chancellor announced the FHL regime will be abolished, effective from April 6th, 2025. In recent years, many landlords have been converting long-term rentals into holiday lets to benefit from higher yields. A less tax efficient environment could discourage this behaviour, and therefore support local housing availability by reversing this process and restoring long-term rentals back into the market. It is likely more landlords will be incentivised to own their holiday lets in a company structure rather than a personal one.
5. Lack of Support for First-Time Buyers
The Budget fell short of directly supporting first-time buyers. We had hoped that the temporary thresholds for first-time buyers, in place until March 2025, would be made permanent. Furthermore, enhancements to other first-time buyer support, such as innovations in LISAs and other deposit support schemes, would have been welcomed.
Overall, while the Spring Budget introduced some positive changes, it highlighted the need for more robust support measures for first-time buyers and ongoing attention to maintain stability in the mortgage and property markets. The mortgage market has experienced significant shifts and challenges in the last few years, amidst high inflation and tightening monetary policy. However, there are encouraging signs emerging on the horizon.
With spring in sight, the property market anticipates a bustling season ahead. Lower mortgage rates have made financing more accessible for homeowners, while increased supply expands options for buyers, setting the stage for an active market. SONIA (Sterling Overnight Index Average) Swap rates, a variable impacting on fixed-rate mortgage pricing, have been creeping up recently and we will be monitoring further activity and its impact on mortgage rates post-Budget.
If you would like to discuss your mortgage options with a qualified professional, you can speak to one of our mortgage consultants on 0800 980 8777, or via email at info@privatefinance.co.uk
LISA = Lifetime Individual Savings Accounts
SONIA = Sterling Overnight Index Average
Please be aware, Private Finance is not a tax advisor and this post does not constitute tax advice. Your home may be repossessed if you do not keep up repayments on your mortgage.
