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Spring Budget shortfalls: What was missing for landlords?

gavin richardson mfv

In what was likely his last Budget Statement before the next General Election, Jeremy Hunt announced his plans for tax, housing, and cost-of-living measures. Where did the Budget fall short for the private rented market (PRS)?

Given Labour’s continued success in various by-elections and opinion polls, this month’s Spring Budget could very well mark the end of the last 14 years of Conservative Government. Perhaps unsurprisingly, besides some positive Capital Gains Tax (CGT) news, the Statement did little to change the Party’s already muddied legacy for landlords and the PRS.

With tax relief cuts across the market, inadequate plans to resolve the housing crisis, and little to encourage further investment from landlords, the sector is left feeling deflated and unsupported. Here, we run through where the Spring Budget fell short and what was missing for buy to let.

Tax changes

In a bid to turn the tide on the Conservative’s electoral fortunes, Hunt’s major announcement was cutting National Insurance by a further 2p from April. Saving the average worker an estimated £450 a year, this cut will be paid for through tax increases elsewhere, including vapes, business class airfares, and, unfortunately, holiday let landlords.

The Government is abolishing the Furnished Holiday Lettings tax relief in an attempt to remove the tax advantage for short-term let landlords and incentivise property investors to let to longer-term tenants. This may deter some landlords from investing in holiday lets moving forward, but it will do little to increase housing supply sufficiently to boost the rental market. The move is expected to raise an estimated £300 million for the Treasury.

In contrast, there is a rare win for landlords as the higher rate CGT has been cut from 28% to 24% to boost sale transactions. For landlords looking to maximise their portfolios, there’s a higher incentive to sell lower-yielding properties and diversify into more lucrative property types, such as HMOs.

The rate change comes into effect on 6th April, and the Government hopes that more properties coming to market will help a large pool of buyers get back onto the housing ladder.

In what’s been coined the ‘granny annexe tax’, Hunt also announced the abolition of Multiple Dwellings Relief (MDR). This scheme allowed those buying between two and five properties to save on Stamp Duty, as MDR calculates the average value of the properties and applies Stamp Duty Land Tax rates to this figure rather than the total purchase price.

According to the Chancellor, the scheme has been “regularly abused”, with HMRC having recovered a staggering £5.8 million in falsely claimed stamp duty relief in the tax year ending April 2022. Scrapping MDR will generate an extra £1.3 billion in tax in the next five years, which is good news for the Treasury but another thing for property investors to bear in mind when planning investment costs.

Housing crisis

Back in January, the Government quietly published new population projections that have serious implications for the types of homes we will need and highlight the importance of the PRS.

According to the ONS, the UK population has a growth projection of 9.9% to 73.7 million between 2021 and 2036. This means an extra 6.6 million people will need housing, and most of the increase (92%) is set to be driven by net international migration. Immigrants typically look for short-term housing solutions when coming to the UK, which will only apply further pressure to the already stretched supply of rental properties.

Furthermore, according to Statista, just over 293,000 people purchased their first home in 2023, down from 405,000 in 2021, marking the lowest recorded figure since 2013. As more would-be first-time buyers continue to rely on the rental market, the supply and demand crisis is only likely to be further extenuated.


Given this reality, it’s disappointing that so little was announced in the way of plans for addressing the housing crisis and support for landlords whom the Government so desperately relies on to house all these tenants.

In previous budgets, new ‘Investment Zones’ were established across the UK, with funding for areas such as Greater Manchester, Liverpool and, most notably, Cambridge. Instead of new hotspots for landlords to focus on this time, Hunt announced plans to “empower local leaders” by extending devolution across England, with the North-East benefitting from a deal worth potentially over £100 million.

Whilst this is a positive for these local areas, we’re yet to see how this funding will be spread. The North-East, in particular, offers landlords plenty of opportunities to earn, on average, much higher rental yields than other UK regions. If the Government had chosen to mark these areas as investment zones, we might have seen more of an incentive for landlords looking for their next investment. It will be interesting to see how the devolution plans work to boost the rental market on these localised levels.  

What’s next?

Despite a desperate need for clarity on the steps to resolve the housing crisis, the Government has unfortunately once again overlooked the significant role the PRS plays in supporting tenants. Cuts to National Insurance and CGT are a step in the right direction and will likely see a swing in voter confidence for the Conservatives, but will do little to better support landlords. Now, as we await further news on the Renters’ Reform Bill, many are left wondering which Party, if any, will acknowledge the critical role the landlord has to play in rebuilding the sector.

Gavin Richardson is Managing Director of MFB.

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