Does the Spring Budget 2024 have any impact on the housing market?
A disappointing Budget for home buyers and mortgage borrowers, although tax changes announced could have a small impact.
Key points
As a result of the Chancellor's announcement, capital gains tax rates will be cut on property sales
Those who rent holiday homes will no longer be eligible for tax breaks
A permanent increase in stamp duty threshold is not planned
As the Government prepares for this year's general election, the Spring Budget was an opportunity to boost its popularity, but many younger and less wealthy voters will be disappointed by the lack of measures to address the shortage of affordable housing and the difficulty of finding a mortgage in the UK.
The idea of a new 99% mortgage scheme has been scrapped.
First-time buyers with small deposits could have gotten onto the property ladder, but critics pointed out that if prices fell, they would also have been more likely to go into negative equity.
It was also hoped the early withdrawal penalty on Lifetime ISAs, which help people save for their first home or retirement, would be reduced, as well as the maximum value of a house you can buy with your savings.
A modest boost to the housing market could be expected from some tax tweaks.
Capital gains tax cut
You pay 28% tax on profits from the sale of a residential property that isn't your primary residence if you're a higher-rate tax payer.
With the reduction of this tax to 24% from April, more people will be able to sell their properties, increasing the number of available homes.
When wealthy property owners sell their properties, they will keep more of what they make.
Tax breaks for holiday lettings have been abolished
Tax breaks for furnished holiday lets are currently greater than for buy-to-let properties, but these will disappear from April, making holiday letting less attractive.
As a result, there will be more long-term rental properties available or more homes available for local residents to buy.
Changes to furnished holiday lets will result in more homes returning to the long let market or some of these homes being sold, benefiting from a reduction in capital gains tax.
There will be a noticeable impact in tourist hotspots, where most of these homes are located. However, it won't have a significant impact on these areas' overall markets. As a result, investors cannot outbid first-time homebuyers.
Relief from stamp duty on multiple dwellings
One change to stamp duty was announced, however.
In June, anyone buying more than one residential property at once will no longer pay less stamp duty.
According to the Government, this is due to the fact that there is no evidence that this relief is encouraging people to invest in private rented housing.
The expert's opinion from Richard Donnel at Zoopla:
'The Budget marks another missed opportunity to take action on boosting supply and mortgage availability in the housing market,' says Donnell.
'The consensus is that the country needs more new homes. Supply has increased but this has now stalled.
'There is a need for a widespread reform of the planning system to encourage more supply. More funding is needed for social and affordable homes, as well as investment in housing infrastructure to unlock more homes.
'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.'