With Jeremy Hunt concluding the delivery of his 2024 budget, reactions have been mixed with many noting the modest predictions of growth in the UK economy and missed opportunities to support first-time buyers and the wider property industry generally.
During his budget address, Hunt said that the UK economy is expected to grow by 0.8% in 2024 and by 1.9% in 2025. This is slightly higher than forecasts from the Office of Budget Responsibility (OBR), which suggested that the economy would only grow by 0.7% and 1.4% during 2024 and 2025 respectively.
Over the longer term, it is currently predicted that growth in the UK economy will hit 2% in 2026, before dropping to 1.8% in 2027 and 1.7% in 2028.
The OBR also currently expects inflation to fall below the government’s 2% target in ‘months’.
Although Hunt’s budget did not focus heavily on the property industry, there were some announcements that will have some impact on the market.
Capital Gains Tax (CGT) for higher earners (currently set at £50,271 – £125,140) will be reduced from 28% to 24%. The government claims that this will fire up the residential property, by boosting revenues and property transactions.
If there is a property theme running through the 2024 budget, it is a slight move away from tax breaks for holiday lets and further focus on growing the rental market.
Hunt announced that Multiple Dwellings Relief (MDR) will be abolished in June. A government press notice for the budget further clarified that had shown no evidence of promoting investment in the private rental sector and that ending the initiative could raise £385 million a year.
Furthermore, the Furnished Holiday Lettings tax regime will be abolished from April 2025. The government expects that this will raise £245 million a year and claims that it will make it easier for local people to find a home within their local community.
Here are some of the additional highlights from Jeremy Hunt’s budget that will impact people’s finances.
Commenting on the budget, Richard Donnell, Executive Director at Zoopla said: “The budget marks another missed opportunity to take action on boosting supply and mortgage availability in the housing market.
“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.”
Cormac Henderson, co-founder and executive chairman at Spring, said: “The chancellor has missed a huge opportunity to stimulate the entire housing market by failing to implement a Stamp Duty break for ‘last time buyers’, many of which feel trapped and put off by the costs of moving – with potential downsizers accounting for circa 3 million properties in the UK.
“By incentivising downsizers who need to ‘rightsize’, this move would also bring benefits to the entire market as it is estimated that each top-of-chain home sale facilitates about 2.7 other sales, therefore creating a win-win solution at all levels. By freeing up the logjam at the top, everyone can benefit, including first-time buyers and families who will have more stock to choose from as people move up the ladder.”
