The 2024 Budget announcement was met with anticipation, especially within the real estate sector, eager for reforms that would bolster the market.
The early signs of the budget’s direction became apparent during Prime Minister’s Questions (PMQs), when the Prime Minister concurred with the notion of prioritising brownfield sites for future development.
This stance, coupled with an accusation towards the Labour party of intending to “concrete over” the entire green belt, seemed to foreshadow a budget potentially unsympathetic to the needs of the property industry amidst a pronounced housing supply shortage.
Contrary to the industry’s hope for substantial reforms to the Stamp Duty Land Tax (SDLT) that would stimulate the market, the Budget introduced a relief lift specifically targeting purchasers of multiple properties. This move diverges from the anticipated support for broad-based market stimulation.
The government’s commitment of £242 million towards the development of 8,000 new homes in Canary Wharf was revealed, a figure that pales in comparison to the demand, representing a mere 2% of the annual new home construction target. This investment, while welcomed, underscores the monumental gap in addressing the housing crisis.
Chancellor Jeremy Hunt announced the elimination of tax breaks for furnished holiday lettings, a decision that is likely to impact individuals countering the rise in HMO (Houses in Multiple Occupation) fines from local authorities by turning to serviced accommodation for higher returns.
Moreover, the Budget included a reduction in the higher rate of Capital Gains Tax (CGT) for residential properties, decreasing from 28% to 24%. However, this seemingly positive change is overshadowed by the lack of clarity on the increase in CGT bills for businesses in the forthcoming tax year, driven by a reduction in the tax-free allowance from £6,000 to £3,000.
The 2024 Budget thus presents a mixed bag for the property industry, with a few concessions but lacking the substantial support needed to significantly energise the market and address the housing supply crisis. The sector’s stakeholders are left evaluating the long-term implications of these measures on investment and development strategies.
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