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Tenants will pay a record £85.6bn in rent in 2023 thanks to a double-digit rise in rentals and millennial tenants needing larger homes.

Landlords received a surprise handout from Chancellor Jeremy Hunt in today’s Spring Budget, after he cut the rate of capital gains tax applying to residential property by four per cent.

In an accompanying document, released today, the Treasury said the move will “encourage landlords and second home-owners to sell their properties”. 

“Making [it] more available for a variety of buyers including those looking to get on the housing ladder for the first time,” the note added. 

Capital gains tax is a tax on the profit sellers make when they dispose of an asset that has increased in value. 

Currently, the tax is applied at 28 per cent on residential property, but for sales made from the 6 April 2024, that rate of tax will fall to 24 per cent. 

Rob Houghton, founder and CEO of reallymoving said: “Cutting capital gains tax will encourage landlords who have been sitting on the fence to sell, but with the supply of rental homes so limited and record high rents, this is going to make life even more difficult for tenants.”

The move comes at a crucial time for the UK’s housing market, after it has been battered by high mortgage rates and over a decade of wage stagnation, making it hard for first time buyers to get on the ladder. 

Alongside the cut in capital gains tax, Hunt also targeted holiday lets, scrapping a £300m tax break for second home owners who let their homes to tourists. 

Lucian Cook, head of residential research at Savills, said: “Today’s budget has bigger implications for private landlords and second homeowners than current and aspiring homeowners. 

“The abolition of multiple dwellings relief is likely to temper investment among landlords, while the targeted cut in capital gains tax on residential properties may tip the balance for a few landlords who have questioned their ongoing investment in the sector.”

He added: “That won’t do much for rental supply, in combination with changes in rental regulation. But neither will it necessarily make it substantially easier for people to get on the housing ladder.

“Without any specific measures to help first-time buyers, it may well accelerate the restructuring of the buy-to-let sector to bigger, less mortgage-dependent landlords, as much as opening up stock to those looking to get a foot on the housing ladder.”

Hunt did not mention any extension to the relief on stamp duty charges for first time buyers pay or the introduction of 99 per cent mortgages. 

James Bailey, Housing Leader at PwC UK, said:“Today’s budget was a missed opportunity to provide a boost to both young aspirational homeowners and the SME supply chains dependent on a thriving residential development market.”



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