miniature house on a wooden table

Spring Budget 2024: Focus on Real Estate

Caroline Fleet, Partner, Head of Real Estate
miniature house on a wooden table
For real estate, there was little content directly impacting the industry from a tax perspective – which given the number of changes over the last few years, felt like a relief. The key tax changes, as outlined below relate to loss of Multiple Dwellings Relief (MDR) for Stamp Duty Land Tax (SDLT) and changes to the Capital Gains Tax (CGT) rate for residential property and the Furnished Holiday Lettings (FHLs), which will impact individuals most directly.

In respect of wider industry matters, the government did announce additional funding of £400 million in respect of Long-term Plan for Towns Scheme as well as a further £188 million for housing projects across the country. They also announced the consultation on new accelerated planning service for major commercial applications. With a general election imminent, housing supply and the planning process will no doubt continue to a hugely debating matter.

Key tax changes

Multiple Dwellings Relief

It was announced that MDR will be abolished for SDLT purposes for all transactions with an effective date of 1 June 2024 onwards. For purchasers who have exchanged contracts on or before 6 March 2024, they will remain eligible for the relief, regardless of when the transaction completes, provided that there is no variation of the contract. Broadly, this relief is currently available where two or more dwellings are acquired under the same or a linked transaction.

Given that HMRC announced a consultation into this relief back in February 2022, the writing has been on the wall for a while in respect of this relief. Although the expectation was that it would be reformed for example restricted to business use assets rather than abolished outright and will impact the Build-to-Rent (BTR) sector as well as individuals purchasing properties with annexes.

Interestingly, HMRC have decided not to consider reforming the mixed-use rules, which was within the same consultation as MDR. The mixed rules will continue to apply where the land interest acquired (and any associated linked land transactions) are not entirely residential such that the taxpayer pays SDLT at the non-residential rates.

Furnished Holiday Letting

The FHL regime is to be abolished from April 2025. The government has announced that draft legislation will be published in due course, including an anti-forestalling rule to prevent the obtaining of a tax advantage through the use of unconditional contracts. Qualifying FHLs have historically benefited from several tax advantages compared to standard residential letting business in particular full relief on interest costs, capital allowances and the availability of business asset disposal relief (10% CGT rate).

The restriction on the deductibility of the interest costs to effectively only a 20% tax credit going forward, is likely to be the most acutely felt by such businesses. Unlike when interest restrictions were introduced for buy to let individual landlords, there appear to be no phasing in of the interest restriction rules over a number of years. This timeline therefore provides landlords little time to assess the impact of these changes and restructure their business accordingly. Affected landlords will also need to consider if they change their commercial model, for example to longer term tenants, whether this will also have knock on impacts on other areas of tax such as inheritance tax reliefs.

Capital Gains Tax

The higher rate of CGT that applies on residential property will be reduced from 28% to 24% for higher rate tax payers. This change will apply from 6 April 2024. For forthcoming disposals, consideration will need to be made on the interplay of the reducing CGT annual exemption, which is currently £6,000 up to April 2024 but will be £3,000 from April 2025.

Minor amendments

Finally, there were some minor alterations made to the business rates empty property relief, which was extended from six weeks to thirteen weeks, SDLT first time buyers relief, where nominees are used and in relating to the public subsidiary definition for SDLT’s registered social landlord exemption. All of these were welcome and removed unexpected anomalies.


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Caroline Fleet
Caroline Fleet
Head of Real Estate