Navigating New Budget Changes: What your Conveyancer Needs to Know

In the ever-evolving landscape of property investment, staying informed about legislative changes is crucial for making informed decisions. Recent budget announcements have introduced changes that could significantly impact your property transactions. Here's what you need to know.

The End of Multiple Dwellings Relief (MDR)

A key change is the abolition of the Multiple Dwellings Relief (MDR) for purchases effective from 1 June 2024. MDR has been a cornerstone relief for investors making bulk purchases of residential properties, such as blocks of flats. Its removal, driven by the surge in speculative claims, notably for annexes like 'granny flats', will lead to increased Stamp Duty Land Tax (SDLT) liabilities for many purchasers. If you've exchanged contracts on or before 6 March 2024, you're still in luck as MDR will apply regardless of the completion date. However, if this relief benefits you, immediate communication with your conveyancer is vital since, depending on your transaction's progress, ensuring completion before the deadline may not be guaranteed.

Capital Gains Tax (CGT) Adjustments

Another significant update concerns the taxation of gains from the sale of residential property. While the sale of your main residence remains exempt, gains from other residential property sales are fully taxable. Previously, gains were taxed at 18% for the basic rate band and 28% thereafter. From 6 April 2024, the higher rate will reduce to 24%, applicable to property sales exchanged on or after this date. For sales completed on or after 6 April but exchanged before 5 April, the previous 28% rate applies. If CGT may affect your sale, it's crucial to consider with your conveyancer whether delaying completion until after 6 April could be beneficial.

Furnished Holiday Lettings Regime Phased Out

For years, the furnished holiday lettings regime has allowed short-term rentals to be treated as trades for certain tax purposes, a common feature in seaside towns. The Budget announced the abolition of this regime from 6 April 2025, transitioning such lettings to be regarded as property investment businesses. This shift will influence various tax aspects, including loan interest treatment, eligibility for business asset disposal and CGT rollover reliefs, deductions for replacing domestic items, and tax relief calculations for pension contributions.

These impending changes signify substantial shifts in the property investment and transaction landscape. They carry significant implications for your investments and financial planning strategies. We strongly advise consulting with your financial advisor or accountant to understand how these changes affect your personal situation and to explore potential strategies moving forward. Should these changes impact your transactions, sharing specialist advice with your conveyancer  is crucial for a smooth process.

Staying ahead of these changes can help mitigate unforeseen challenges and capitalise on new opportunities.