Jeremy Hunt is preparing the next big outing for HM Treasury’s red box, limbering-up to make a suite of tax and fiscal policy announcements next week. His speech on 6th March will very likely be the last big Budget address before the next General Election – which means the Chancellor is more likely to pedal vote-garnering tax-cutting policies than in a less politically-charged year.

We asked leaders in the prime resi sector to weigh-in on what new tax policies they expect to be announced next week, as well as what they would like to see happen… These are the key talking points:

Inflation & interest rates

It’s already a government priority, but most of our panel of property industry leaders believe that reducing inflation should remain top of the Treasury’s agenda. This would enable interest rates to stabilise further or even fall, which, as Will Scoular of Investec points out, would provide “a significant catalyst for a recovery of the residential market.”

Stamp Duty

Traditional and widespread calls for a cut to Stamp Duty are tempered with realistic expectations this year – as summarised by Camilla Dell of buying agency Black Brick: “I think we were all secretly hoping for some good news in this budget as a last-ditch attempt for the Tories to win back some support, but I just don’t see what they can give away tax wise.” Mark Parkinson of Middleton Advisors agrees, explaining that “the perennial cry for a reduction in stamp duty is just never going to be politically acceptable for prime properties.”

“All we hope for is a reduction in SDLT,” declares Marc Schneiderman of North London agency Arlington Residential. “However in reality I suspect there is more chance of stumbling across a unicorn in Regent’s Park!”

Nigel Bishop of buying agency Recoco thinks, however, that a targeted approach could work. He is pitching “a freeze of SDLT for downsizers” that would encourage over-65s to move on and “boost the number of family homes being put up for sale.” Easing the burden on downsizers has a lot of support on the Conservative backbenches, with over 100 “One Nation” MPs backing the cause.

Jess Bishop of super-prime brokerage DDRE Global has bigger ideas. She suggests more full-throated reform, away from an up-front transaction tax towards an annual levy. “It would be refreshing to see us look to other global locations that do it differently (and sometimes better!),” she says, adding: “A yearly paid tax, as is the case in the US, has a lot of merit.”

International buyers

The prospect of increased tax rates for non-British buyers of UK property has been floated by the Treasury, potentially raising the current 2% surcharge. This “could definitely impact the prime central property market,” warns Shaun Drummond of Harrods Estates, who suspects any further increase to the transaction tax could push “many more” would-be overseas buyers to rent instead.

“We must continue to encourage a global London to attract international buyers to invest and/or live here,” says Dominic Agace, boss of estate agency network Winkworth “– avoiding punitive moves that will affect the delicate balance of the market and all the suppliers and services which benefit from high net worth buyers.”

Beyond this, Agace says “the Chancellor needs to introduce tax incentives through inheritance tax or stamp duty concessions to encourage downsizers and stimulate a healthy flow through the property market.”

Inheritance & Capital Gains tax

Suggestions of a cut to Inheritance Tax have been circulating in advance of the Budget. This “could be a game changer,” says Jon Johnson, Managing Director of London estate agency Johns&Co, “providing new avenues for efficient wealth management and estate planning.”

But “calls for Inheritance Tax to be abolished are wishful thinking,” laments Antony Antoniou, CEO of Robert Irving Burns – although “simplification of the regime and unfreezing the nil rate band would certainly help to make residential buy-to-let a more attractive asset class.”

Buying agent Nigel Bishop agrees that IHT rates should be updated, arguing that raising the threshold for property values “seems long overdue.”

There is potential for the Chancellor to make changes to both IHT and Capital Gains Tax, notes Mark Harris of mortgage broker SPF Private Clients – but “we are not holding our breath.” He adds that “investors are unlikely to see much relief in the Budget.”

Similar thoughts come from Vic Chhabria of London Real Estate Office, who expects only “minor, if any” changes to IHT and Stamp Duty next week, as the government seeks to deliver “the broadest possible people pleaser ahead of the polls.”

VAT on building works

The current VAT regime provides an incentive for property developers to build new homes rather than refurbish existing buildings. “We would urge the Government to reconsider the current VAT thresholds,” says Will Scoular of Investec, noting that the existing policy “ignores the inherent carbon capture advantages of repurposing over building new.”

Buy-to-let

There’s a chronic shortage of rental properties, particularly in London. Richard Davies, Director of UK Operations at Chestertons, suggests this could be addressed by easing the tax burden on landlords. “We would like the government to consider reintroducing mortgage interest relief and other tax breaks for landlords,” he says, explaining: “This would encourage more buy-to-let investors and smaller landlords to acquire property to rent again which will help meet the ongoing demand from tenants and stabilise rental increases in the capital.”

Antony Antoniou, CEO of Robert Irving Burns, agrees that “the Government should be considering how to incentivise greater investment in buy-to-let.”

Talking Heads

Prime property industry hopes & expectations for the Budget 2024

Reform the SDLT system to free the property market

Alex Michelin, Founder and CEO of property developer Valouran

“In the budget, we would like to see a reform to the SDLT system in the UK. It is now abundantly clear that the present system is not working. It is gumming up the housing market, preventing people from moving, stopping first time buyers getting on the housing ladder, affecting older generations because they cannot afford to move from their big old houses and is therefore reducing social mobility – the very bedrock of how society improves, and how the population moves forward. It is a massive problem and the government needs to act to free the market and allow transactions to proceed without so much friction and tax burden.”

I just don’t see what the Conservatives can give away tax wise

Camilla Dell, Managing Partner at buying agency Black Brick

“As far as other tax changes go, I don’t see the Conservatives being able to change much considering the recent data that the UK went into recession in the final quarter of last year. I think we were all secretly hoping for some good news in this budget as a last-ditch attempt for the Tories to win back some support, but I just don’t see what they can give away tax wise.

“The property market has taken a beating in terms of tax rises and red tape for Landlords since the Tories came into power. I would like to see a simpler tax system, and one which doesn’t prevent people moving up and down the housing ladder due to prohibitive levels of stamp duty. Current stamp duty levels are in my opinion too high and have created a huge drag on the volume of transactions taking place in the UK. In addition, the red tape on buy to let landlords have created unfavourable conditions for tenants (an unintended consequence I’m sure) with rents rocketing double digits over the last couple of years in London due to reduced supply as many private Landlords have left the market.”

The top end of the property market is already ‘well-taxed’

Mark Parkinson, MD of Middleton Advisors

“The perennial cry for a reduction in stamp duty is just never going to be politically acceptable for prime properties, it is also a signal that the top end of the property market is already ‘well-taxed’.

“In the current environment it is probably better to focus on what we don’t want to see, namely increased taxes on international buyers – we want to avoid more restrictions or penalties for non-doms as they continue to form an integral part of the landscape in the prime property market.”

Further tax increases for international buyers could definitely impact the PCL market

Shaun Drummond, Director of Residential Sales at Harrods Estates

“Given that a big section of our market is based on international buyers in Prime Central London, one of the big things we will be looking at is whether there are any changes for these pools of buyers when it comes to Stamp Duty. With there already being a 2% surcharge for international buyers, at the upper end of the market with most of them paying 17% stamp duty land tax – so any further increases could definitely impact the prime central property market.

“While PCL prices are still below the peak of 2014/ 2015 and property here still offering relative value compared to other major world cities, especially with the dollar/pound currency play, any additional increases could impact appetite for international buyers. Instead, many more may choose to rent at the upper-end of the market rather than pay yet more Stamp Duty.”

Reconsider VAT thresholds to encourage property refurbishment

Will Scoular, Head of Private Client RE at Investec

“First and foremost, the Government should prioritise setting out a prudent monetary policy to reduce inflation. This would in turn enable interest rates to be reduced – providing a significant catalyst for a recovery of the residential market. It would also help first-time buyers to get on the housing ladder.

“We would also urge the Government to reconsider the current VAT thresholds which encourage new-build residential development and discourage property companies who are considering refurbishing/repurposing existing buildings. The current policy ignores the inherent carbon capture advantages of repurposing over building new. Refurbishment can in some cases be more costly than redevelopment and, with reduced demand for shopping centres and office real estate, there is a clear opportunity to provide much-needed housing within existing developed sites.”

Reintroduce tax breaks for landlords

Richard Davies, Director of UK Operations at Chestertons

“Tax changes and legislations have forced a number of Buy to Let investors to sell up which has inevitably decreased the number of available rental properties and over time will create an even more competitive environment for tenants. To ease pressure on the current supply and demand deficiency, we would like the government to consider reintroducing mortgage interest relief and other tax breaks for landlords. This would encourage more Buy to Let investors and smaller landlords to acquire property to rent again which will help meet the ongoing demand from tenants and stabilise rental increases in the capital.”

Calls for Inheritance Tax to be abolished are wishful thinking

Antony Antoniou, CEO of Robert Irving Burns

“London’s prime property market is beginning to pick up, as greater demand from occupiers translates into higher sales volumes. However, with the economy still on unsure footing and political uncertainty in the run-up to the General Election, investors are having to be more savvy.

“Commercial property, falling outside of the scope of Inheritance Tax for overseas investors, has become a more popular asset class, particularly amongst Asian investors.

“Calls for Inheritance Tax to be abolished are wishful thinking but simplification of the regime and unfreezing the nil rate band would certainly help to make residential buy to let a more attractive asset class. With supply of good-quality rental stock low, the Government should be considering how to incentivise greater investment in buy-to-let.”

Freeze SDLT for downsizers

Nigel Bishop of buying agency Recoco Property Search

“For decades, our nation’s desire to own a property and the associated taxes have been a major revenue stream for the UK government. Today’s housing market, however, suffers from an evident imbalance between supply and demand which prevents many people from buying a home and we would like the Chancellor to introduce steps that will help get the housing market moving again.

“The UK has a vast number of property owners aged 65 and over who would like to downsize but, due to the current level of SDLT, are reluctant to do so. Property values have ballooned over the past decades which means the SDLT rate of 5% to 12% can present a substantial expense that stops many people from selling up and pursuing buying a different property. We believe that a freeze of SDLT for downsizers would encourage this market demographic to finally make that step which will inevitably boost the number of family homes being put up for sale.

“Although Jeremy Hunt initially announced that the Inheritance Tax threshold will be locked in until 2028, we would welcome the government to rethink this move. The IHT threshold hasn’t been updated in over two decades whilst property values have increased dramatically during this time. It is therefore outdated and raising the threshold from £325,000 to £500,000 per person or £1mn for couples seems long overdue.”

Look to the US for SDLT reform ideas

Jess Bishop, advisor at DDRE Global

“Reform of Stamp Duty Land Tax has significant potential to address several challenges in the market. Not least in unlocking larger family homes where empty nesters have little incentive to move with such a financial hit waiting for them. But I hope the Chancellor takes a broader view than this, as it’s not only this end of the market that the current ‘upfront charge’ model stifles.

“In terms of reform, it would be refreshing to see us look to other global locations that do it differently (and sometimes better!). A yearly paid tax, as is the case in the US, has a lot of merit. Paid out annually alongside other utilities, it removes the strong disincentive to moving – up or down – that the current system imposes while still maintaining an income for the government. Rather than vote-seeking tweaks ahead of the General Election, this is an opportunity for real, meaningful change that could unlock a lot of supply and stagnation in the market.”

All we hope for is a reduction in SDLT

Marc Schneiderman, Director at Arlington Residential

“All we hope for is a reduction in SDLT.  However in reality I suspect there is more chance of stumbling across a unicorn in Regent’s Park!

“If the Chancellor really wanted to invigorate the property market, that’s what he should be doing. Even a nominal reduction what have an impact.

“Consider the following:

“As recently as 20 years ago the highest rate of Stamp Duty was 2%.

“Now it is 12% plus an extra 2% if you are an overseas buyer and an additional 3% if you own a property anywhere else in the world.  In my view this is plainly unfair and unjust.

“The Government has benefitted from huge increases in revenue from SDLT as property values have soared in the last 20 years.

“So not only are they now taxing up to 8 times what they were 20 years ago, they are also levying this tax on values that have quadrupled; as an example, a house in 1998 that sold for £2m would have paid £40,000 in SDLT. That same house today which is selling for £8m is paying 15% (assuming the buyer owns a second property) at £1.2m.

“The  SDLT ‘holiday’ during the Covid 19 Pandemic generated noticeable increases in levels of activity and property sales.  This demonstrated that even in the worst period of time for business since 1939,  a SDLT reduction was able to contribute to a  higher volume of sales and as a consequence, helped to maintain the employment of surveyors, architects, designers as well as hundreds of thousands of people in the building trade.”

The Chancellor will do whatever he can to make the budget as enticing as possible

Nick Loweth, Regional Director at The Country House Department

“I suspect that the Chancellor will do whatever he can to make the budget as enticing as possible prior to the forthcoming general election. A strong property market has always given a boost to the economy, so it is very possible that he will make some changes to inject some pace into the market, which has somewhat stalled after the pandemic peak. One area that has had a strong effect in the past has been an adjustment to stamp duty, which is punitively high at the middle / top end of the market currently. This could be in the form of a simple percentage reduction or even a stamp duty holiday (although I think this is unlikely). There could also be more help to buy at the lower end of the market, again through a lowering of stamp duty or a change of thresholds.”

I would expect an uncontroversial budget given the looming election

Katrina Graham, Director at property developer Residence One

“The spring budget will be designed with the election in mind and the objective of appealing to the majority voter. Expected announced measures are likely to be more meaningful in terms of sentiment creation rather than beneficial policy/tax strategy. Current suggestions focus on potential tax reductions delivered through basic tax bands or personal allowances. However, I would imagine the Chancellor would err on the side of caution given inflation has not reduced to target levels. A small upward movement to inflation would have a meaningful effect on interest rates and a negative effect on the property market, a market that is expected to regain traction in 2024.

“As always, a Stamp Duty reduction or freeze would have the double benefit of appealing to mainstream voters whilst consequently creating positive sentiment which the property market would benefit from.

“The Government is receiving increasing pressure to fund local councils and government departments. Although I would imagine this is unlikely, consideration for planning resources and framework is one that property industries would welcome. Developer planning continues to be one of our greatest challenges. A less burdensome system would unlock so many potential developments.

“In summary, I would expect an uncontroversial budget given the looming election and pressure around inflation and interest rates. Our Chancellor has been reported discussing the benefits of tax cuts for business, following suit with countries which have benefited from demonstrable economic growth. However, given the conservative’s current political agenda, it’s unlikely this will be delivered.”

Investors are unlikely to see much relief in the Budget

Mark Harris, chief executive of mortgage broker SPF Private Clients

“Reports suggest that the Chancellor has first-time buyers in his sights with plans to introduce a 99% mortgage, backed by the government and aimed at those who can’t raise a deposit. While not directly targeted at high-net-worth individuals, anything that gets the market moving at the bottom end will have a positive impact further up the ladder and enable other transactions to happen. In other words, it is good for the housing market as a whole although critics will warn that unless supply is also addressed, such a scheme will only push up property prices. Another version of Help to Buy (as it was or improved) would also boost demand and help supply by getting the construction market going again.

“Many within the property industry are calling for stamp duty reform, perhaps incentives for downsizers and another holiday for first-time buyers. Some are going as far as calling for a total recalibration. Last time there was a stamp duty holiday it led to a significant increase in activity and transactions, which is better for the overall health of the market than rising property prices.

“Investors are unlikely to see much relief in the Budget. Landlords have become a dirty word yet few dispute the need for a fully-functioning private rented sector. Reviewing or reversing some of the heavy tax burden that has been imposed over the past decade would be a welcome first step towards addressing the balance a little.

“The government could pause, review or reverse changes to capital gains tax thresholds and/or review changes to inheritance tax, which would be welcome but we aren’t holding our breath.”

A revision to stamp duty thresholds is vital

Dominic Agace, Chief Executive of Winkworth

“We expect to see support for first time buyers with a help to buy update or mortgage guarantee scheme, allowing those that can afford mortgages but can’t raise the deposit to get on the ladder.  This will also support demands to ensure housebuilders deliver homes for first time buyers.

“The lifetime ISA and 25% bonus on £4k invested per year limited to £450k properties needs to be tweaked and simplified to allow for price growth.

“A cut to income tax appears heavily flagged which will support the UK recovery in 2024.

“The Chancellor needs to introduce tax incentives through inheritance tax or stamp duty concessions to encourage downsizers and stimulate a healthy flow through the property market.

“The return of mortgage interest relief will ensure there remains enough supply in the private rental sector for demand and a healthy mix in the housing market in our cities, to enable young professionals to start their careers, bringing vibrancy and international appeal to London and other major cities.

“A revision to stamp duty thresholds is vital to reflect the fact  that a £1mn property is very different in different parts of the country. Due to the cost of property in London,  young families  are being affected because they need space for growing families. The capital should not be a city just for the very wealthy.

“We must continue to encourage a global London to attract international buyers to invest and/or live here – avoiding punitive moves that will affect the delicate balance of the market and all the suppliers and services which benefit from high net worth buyers.

“Many house builders rely on international investors buying at an earlier stage to ensure the viability of a scheme. The investors also contribute to the homes available for private renters.”

Inheritance Tax reforms could be a game changer for HNWIs

Jon Johnson, Managing Director, Johns&Co

“The Spring Budget is a key moment for our clients navigating London’s property market. The rumoured reduction in the income tax rate to 18% would be more than just a policy change – it would be an opportunity for our clients to increase their investment power in the property sector. For our high-net-worth clients, the anticipated inheritance tax reforms could be a game changer, providing new avenues for efficient wealth management and estate planning.

“We’re particularly hopeful for any new or refreshed initiatives that could benefit first-time buyers, like enhancements to the Help-to-Buy scheme. These changes are not just policy shifts, they represent crucial support for our clients looking to enter London’s high-value property market. We’re also keen to see new incentives for sustainable development, aligning with our commitment to future-proof our clients’ investments and contributing to London’s growth.

“The Spring Budget isn’t just about tax reforms and housing policies, it’s about creating real benefits for our clients, helping them to navigate and succeed in London’s dynamic property market. At Johns&Co, our focus is always on how these changes will unlock new possibilities for our clients, enhancing their experience and opportunities in the property sector.”

I expect minor, if any, changes to SDLT and IHT

Vic Chhabria, founder and CEO, London Real Estate Office

“Stamp Duty and Inheritance Tax are unsurprisingly on the potential agenda for next week’s Budget, with a General Election round the next corner and the incumbent party seeking to maintain, if not, gain favour among their voter set.

“On that basis, any decision is going to be politically tactical and short term in view. Which is a risky business right now. We need a longer term and economically driven view that seeks to ensure London and the UK remains an attractive place in which to live, invest and spend in what is an increasingly competitive global market.

“We have long relied on the sentiment that ‘London is London’ and it is certainly a unique and enduringly appealing draw. Yet we cannot ignore the wider context of rising taxes, interest rates and levies alongside complicated bureaucratic systems on which other leading cities are closing the gap.

“As with most of my industry, I’d like to see meaningful reform in the likes of SDLT and IHT in particular: one that nurtures the prosperity of existing citizens without inadvertently indicating wealth is unwelcome. However, I’d expect next week’s changes to be minor, if any, in these areas in an attempt to be the broadest possible people pleaser ahead of the polls.”