Key Takeaways for Landlords: Stamp Duty And Capital Gains Tax
Introduction:
The Spring Budget, delivered by the UK government in March or April each year, outlines the government’s economic and fiscal policies for the upcoming year. Jeremy Hunt just announced the Spring Budget 2024 recently.
This article will analyse the key measures announced in the Spring Budget 2024 and discuss their potential impact on property investors. By understanding the implications of the Spring Budget, property investors can make informed decisions about their investment strategies and adapt to the changing market conditions.
Changes to Capital Gains Tax
One of the key announcements in the Spring Budget 2024 was the reduction in capital gains tax (CGT) from 28% to 24%. This means that property investors will pay less tax on any profits they make when they sell a residential property.
The reduction in CGT might encourage more people to sell their properties. However, will it alter the housing supply and demand situation? Mike Aspinall, CEO and cofounder of The NPP Group highly doubts it.
New ISA Incentive
The Spring Budget 2024 also announced a new incentive to encourage people to invest in British assets. The new incentive allows individuals to invest an extra £5,000 tax-free into British assets, including stocks and debt through an ISA.
This incentive could be beneficial for property investors who in a position where they are saving money towards their next property investments. However, if you have more than £40K cash saving, we believe property is one of the best assets to invest in. Unlike cryptocurrency, stock markets or businesses, property is insurable. You can enjoy capital appreciation and rental income at the same time.
Scrapping of Stamp Duty Relief for Multiple Dwellings
The Spring Budget 2024 also announced the scrapping of stamp duty relief for investors purchasing multiple dwellings in a single transaction or linked transactions. This means that investors will now have to pay the full stamp duty rate on all properties they purchase, regardless of whether they are buying a single property or multiple properties in one transactions.
Therefore, this change is unlikely to have an impact on most of the property investors.
GDP Growth Forecast
The Spring Budget 2024 also included a revised GDP growth forecast for the UK. The government now expects GDP to grow by 0.8% in 2024.
In fact, the prediction changes time by time and property investors shouldn’t be impacted by the numbers too much. To navigate the dynamic landscape of the UK property market in 2024, you can download our UK Property Market Forecast 2024.
Next Important Date For Investors: Impact on Mortgage Rates
Mortgage rates are a key factor for property investors, as they can have a significant impact on the cost of purchasing and owning a property. The Bank of England’s Monetary Policy Committee (MPC) is responsible for setting interest rates in the UK.
The MPC is expected to drop interest rates at its next meeting on March 21st. This could lead to a fall in mortgage rates, which would make it cheaper for property investors to purchase and own properties.
Potential impact on property investors:
- Lower cost of borrowing
- Potential increase in confidence for property investors
- Potential increase in property prices
Conclusion
In conclusion, while the news from the Spring Budget may be interesting, it should not be the primary focus for property investors. Successful property investors focus on the long-term fundamentals of the market and make investment decisions based on sound analysis.
Over the long term, property has consistently outperformed other asset classes, such as stocks and bonds. This is because property is a tangible asset that provides both income and capital growth potential.
Buy and wait, rather than wait and buy.
