What Does The Spring Budget 2024 Mean For The Housing Market In The North Of England?

Issue 100

The UK's residential property market has seen significant shifts in recent years, particularly in the realm of short-term lets and second home ownership. The March 2024 budget introduced several crucial changes aimed at addressing issues surrounding these practices.

William Thornton and Fiona Roe take a look at the changes investors, landlords and second homeowners could be facing.

Short-Term Lets Regulation

Fiona Roe, Branch Manager with youngsRPS, examines propsed changes to short-term, lets:

“Short-term lets, more commonly referred to as holiday lets, facilitated by platforms like Sykes, Airbnb and Vrbo, have become increasingly popular in recent years, with the number of holidays lets in England rising by 40% between 2018 and 2021. Pandemic enforced travel bans and the cost-of-living crisis haven’t damped the public’s desire for holidays, but it has meant that many have had to reevaluate their finances and chose staycations over holidays overseas. Sykes reported a 50% increase in bookings since 2019 in their 2023 Holiday Letting Outlook Report, and North York Moors National Park reported 8.7 million tourism visits to the park in 2022.

While these rentals offer flexibility and additional income for property owners, and increased income to the locality of the property, they have raised concerns about housing availability, community disruption, and regulatory oversight.

Mr Hunt’s budget proposed the elimination of tax relief that currently sees homeowners favour income generated from holiday bookings than long term rentals. With changes seeking to create a more balanced playing field for both traditional long-term rental providers and short-term let operators while addressing community concerns about the impact of transient visitors on neighbourhoods.”

Multiple Dwellings Relief

William Thornton, Head of Residential Agency on the abolishment of Multiple Dwellings Relief:

“The multiple dwellings relief (MDR) scheme, a stamp duty relief for people who purchase more than one dwelling in a single transaction, was intended to support investment in the private rental sector. Mr Hunt suggested in his budget that this scheme hasn’t been used in the purpose for which it was designed, with the system being abused to profit from the use of multiple dwellings on a short term let basis rather than investing in long term rentals.

The Office of National Statistics reported back in 2023 that around 70,000 second addresses were used as holiday homes in England and Wales, with more than 3,500 of these located in Northumberland. The popularity of second homes, particularly in tourist destinations and scenic rural areas like the North East coast and the Tyne Valley, has undoubtedly contributed to housing affordability challenges for some areas of the UK but the news of the proposed abolishment of MDR on 1st June 2024 was not greatly received by those investors looking at purchasing multiple properties, be it for long or short-term rental properties.

Better news was in the offing for those with existing property portfolios, with a decrease in capital gains tax rates. The Chancellor will implement a reduction in the higher rate of capital gains tax, lowering it from 28% to 24%, with the aim of stimulating increased property transactions.”

In conclusion, property investors should not be disheartened too much by the Chancellors budget. Investment involves prioritizing the market’s long-term fundamentals and making decisions grounded in thorough analysis. Potential income and capital growth from property has historically outperformed other forms of investment and continues to do so. It’s crucial for property investors to maintain a broader perspective.

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