Spring Budget 2024: What are the Real Estate tax measures?

The Chancellor has delivered what is expected to be his decisive and final budget before the next general election.  Understandably there has been focus on the headline tax cuts, however there were also important real estate related measures.

The Real Estate tax measures were:

   
• Where the effective date of transaction is on or after 6th March 2024, registered providers of social housing will not be liable for Stamp Duty Land Tax (SDLT) when purchasing property with a public subsidy (the definition of which will be amended to include expressly a recycled subsidy). Although the relief is already available in law, the changes are helpful in clarifying the range of scenarios where this relief is available and providing greater certainty to taxpayers. Public bodies will also be exempted from the 15% anti-avoidance rate of SDLT, which applies to acquisitions of dwellings worth more than £500,000 by companies or partnerships with at least one corporate partner, or for the purposes of a collective investment scheme.
   
• From 6th March 2024 the rules for claiming first-time buyer’s relief (FTBR) from SDLT will be amended so that individuals buying a leasehold residential property through a nominee or bare trust will be able to claim it. Previously the bare trustee or nominee would be treated as the buyer for SDLT purposes, and they would not satisfy the requirement that they would be occupying the dwelling as their only or main residence. This amendment allows them to benefit from FTBR.
   
• From 6th April 2024 the higher rate of Capital Gains Tax for residential property disposals will be cut from 28% to 24%. The 18% lower rate for any gains that fall within an individual’s basic rate band will remain. The government is hoping that this will “raise revenue and boost the availability of housing by encouraging residential disposals.”   CGT private residence relief will continue to apply.
   
• Abolition of the Multiple Dwellings Relief (MDR) on SDLT. MDR is a bulk purchase relief but the government states they can see no evidence that it supports investment in the private rented sector, which was its original objective. It will end on 1st June 2024, so any transactions wishing to use the relief need to complete no later than the 31st May 2024 unless contracts were exchanged on or prior to 6th March 2024.  Provided that no variations are made to contracts exchanged on or prior to 6th March 2024, it is irrelevant when the transaction actually completes (so even after 1st June 2024) and the relief can still be applied. If you have a transaction where you were wishing to apply the relief, we strongly urge you to reach out to your lawyer to urgently discuss the possible implications.
   
• Abolition of the Furnished Holiday Lettings tax regime.  This will take effect from 6th April 2025 eliminating the tax advantages for landlords who let short term furnished holiday properties over those who let residential property to longer term tenants. Further draft legislation is needed and this will be published in due course.

It should also be noted that the government has confirmed that it has no plans to make any changes to the SDLT rules in relation to mixed use properties. This was one of the two areas considered in the 2022 consultation along with the MDR (you can read the government’s response to the consultation).  They have stated that no changes to mixed use properties are planned.

Certain Business Rates measures were also introduced.  From 1st April 2024 the Empty Property Relief (EPR) ‘reset period’ will be extended from six weeks to thirteen weeks in England.  This means that once the initial EPR ends, the property would not become eligible for another EPR unless the property is occupied for the increased thirteen-week period. They are aiming to reduce the financial incentive to avoid business rates on empty properties through “box shifting” (an artificial occupation where items are moved into a building solely to satisfy the reset period and allow EPR to be claimed once more).

The government also announced it will consult on a “General Anti-Avoidance Rule” for business rates in England and committed to improving communications for ratepayers to help combat “rogue” business rates agents.

The government confirmed in its papers that it is “committed to building more homes and supporting more first-time buyers onto the housing ladder”.  In support of this, they are also to publish an Expression of Interest for round two of the Department of Levelling Up, Housing and Communities Local Nutrient Mitigation Fund which it states will “support delivery of 30,000 homes by 2030 that would otherwise be stalled due to high levels of nutrient pollution.”

Please do not hesitate to contact your usual TLT contacts should you wish to discuss how any parts of the 2024 Spring budget may affect you or if you wish to discuss further.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at March 2024. Specific advice should be sought for specific cases. For more information see our terms & conditions.