It was a disappointing Budget for anyone hoping for measures to help home buyers and mortgage borrowers but tax changes announced could have a small impact.

Today’s Spring Budget was a chance for the Government to boost its popularity ahead of this year’s general election but there will be many younger and less wealthy voters left disappointed by the lack of measures to address the shortage of affordable housing in the UK and the challenges of getting a mortgage.

It was thought that a new 99% mortgage scheme could be announced but this idea has now been ditched.

It would have helped aspiring first-time buyers with small deposits get onto the property ladder, although critics pointed out that it would also expose them to greater risk of getting into negative equity if house prices were to fall.

There were also hopes that the early withdrawal penalty on Lifetime ISAs, which help people save for their first home or retirement, would be reduced and the limit on the value of home you can buy using the money you save in them would be increased.

However, there were some tax tweaks that could result in a modest boost to the housing market.

Capital gains tax cut   

Currently, if you sell a residential property that isn’t your main home and you’re a higher rate tax payer, you pay 28% tax on the profits you make.

From April this will be cut to 24%, which could encourage more people to sell property and increase the supply of homes available.

On the other hand, wealthy property owners will get to keep more of the money they make when they sell it.

Holiday lettings tax breaks abolished

Owners of furnished holiday lets currently get more tax breaks than owners of buy-to-let properties but these will be scrapped from April, making holiday letting a less attractive option.

This could result in more longer-term rental property becoming available or more homes available to buy for local people.

Our Executive Director of Research, Richard Donnell, says: ‘The furnished holiday let changes will see a mix of impacts split between more homes returning into the long let market or some of these homes being sold, benefitting from a reduction in capital gains tax.

‘The impact will be felt in tourist hotspots, where most of these homes are to be found. But it’s unlikely to have a big impact on the wider market in these areas. It is a further attempt to ensure investors can’t outbid first time buyers.’

Stamp duty relief on multiple dwellings scrapped

There was one change to stamp duty announced, however.

From June, anyone buying more than one residential property at once will no longer pay less stamp duty than if they were buying them individually.

The Government says this is because there was no evidence that this relief was encouraging more people to invest in the private rented sector.

Our expert’s view

‘The Budget marks another missed opportunity to take action on boosting supply and mortgage availability in the housing market,’ says Donnell.

‘The consensus is that the country needs more new homes. Supply has increased but this has now stalled.

‘There is a need for a widespread reform of the planning system to encourage more supply. More funding is needed for social and affordable homes, as well as investment in housing infrastructure to unlock more homes.

‘The Government should also look to support the emergence of a long-term fixed rate mortgage market as a matter of urgency.

‘This will help more young people with smaller deposits access home ownership – particularly in southern England, where deposit size is the biggest barrier to getting on the housing ladder.

‘Another missed opportunity is the decision not to make the £625,000 threshold for first-time buyer relief permanent. This means 30% more first-time buyers will be liable to pay full stamp duty from March next year.’


Key takeaways

  • The Chancellor has announced a cut in the rate of capital gains tax paid on property sales
  • Tax breaks for those letting holiday homes are to be scrapped
  • There are no plans to make the temporary higher stamp duty threshold permanent