The Spring Budget – What it Means for Private Landlords

The Spring Budget – the Impact on Private Landlords

So, what was in the Spring Budget for landlords?

Well, not all that much really.

It rather reminded me of the Dad’s Army scene where the platoon have to rest in a barn for the night. Captain Mainwaring asks Private Frazer to tell his ghost story about the “Old Empty Barn”. Mainwaring gets the half dozing platoon awake to listen. Frazer rolls his eyes for what seems an interminably long period, then starts, “Tis, the story of the auuuld empty barn”. He now has the full attention of his audience.

His wild eyes look around the barn at the men who sit transfixed and he then says, “Och, well, there was nothing in it”.

Mainwaring looks both confused and angry at the same time. Frazer repeats, as if there was any doubt, “Dee ye not ken? There was nothing in it!”

And so, it was with the budget. Not much in it, but when you have spaffed billions on the utterly pointless so-called “pandemic” measures, there isn’t much left in the pot.

There was some good news, sort of.

Private landlords will pay a reduced rate of capital gains tax – 24% instead of 28%, but with the huge cuts in the capital gains tax allowance in recent years, (from £12,000 to £6,000 last year and then down to £3,000 from this April), let alone the long-ago removal of any indexation/taper relief and the abolition of private lettings relief, this is thin gruel indeed. You would need to make a very substantial gain to counteract the cuts in the allowance before you were better off from this measure.

Holiday Lets

The big losers were owners of holiday homes.

This is a group that has long been lined up to get as heavily clobbered as their private rented sector landlord cousins have been over the past ten years. And Jeremy Chunt – him of the silent “H” certainly did not disappoint.

The furnished holiday let regime will be abolished from April 2025. Ouch!

This regime has allowed holiday let owners to claim full mortgage interest relief and allowed for a more generous tax treatment on capital gains. The change will bring it into line with the private rented sector and is expected to raise £300m for the Treasury, so to put that in perspective, less than one hundredth of what the government wasted on the useless Test and Trace during the “pandemic”.

In doing this, he is bowing to pressure from some in the seaside towns. Perhaps a better idea would have been to have built more affordable housing for locals in such locales, but that is in the “too difficult” box evidently.

It will be interesting to see how many holiday homeowners exit the market, therefore cutting the supply of holiday lets – and with them will go some of the tourists too, who when faced with the resulting increased cost of British seaside accommodation, may increasingly opt for what’s always seemed to me to be a far cheaper (and usually warmer) foreign holiday break instead.

Multiple Dwelling Reliefs

Another minor thing Hunt did was to impose a “granny annex tax”. He is abolishing Multiple Dwelling Relief (MDR) – a scheme that’s allowed people buying between two and five properties to pay less stamp duty. (Homes with an annex have always counted as two dwellings).

Natch, those buying six or more properties under the scheme, previously used by Mr Chunt himself in 2018 when he bought seven flats in Southampton, can still pay non-residential stamp duty rates, which are capped at just 5 per cent. As stamp duty on residential purchases can be up to 12 per cent, that’s potentially quite a saving.

So, it seems to me yet another example of the Conservatives looking after bigger investors, many of whom will be corporates whilst hitting the more ordinary Joe Soaps who simply wanted to look after an elderly relative in an annex part of his property.

Do you see it now? We were never “all in it together”.

(The MDR ruling will apply to transactions with an effective date on or after June 1^st. For contracts exchanged on or before March 6^th, the MDR relief will still apply even if completions of the purchase takes place after June 1^st).

Other Non-Landlord Measures

Of course, the big headlines were elsewhere and were made by the cut in National Insurance rates from 10 to 8 per cent and the abolition of the non-Dom status – the latter being a complex area. Binning the non-Dom status looks attractive but is a potentially risky move, because in the real world outside the student common room, all countries like to court the wealthy for their investments into their economies as much as for their (occasional) expertise.

The non-Dom removal looks to me to be about stealing a Labour idea, thus making the two main parties even more similar than ever.

Most people will know that there is a lot of what’s called “fiscal drag” been going on in recent budgets – where the freezing of tax thresholds has meant more people getting drawn into paying higher rates of income tax. This and the coming big increases in council tax are expected to wipe out any benefits people are likely going to get from the NI cuts.

Only a few months left to go before you get to vote for one of the three main uniparties.

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