Spring Budget 2020 Property Market: What Investors and Landlords Need to Know
The Spring Budget 2020 property market update from Chancellor Rishi Sunak outlined significant measures in extraordinary times. While Covid-19 dominated the Budget, landlords, developers, and overseas investors all face changes that could reshape their short- and long-term strategies. Articus Finance examines the five most pressing property-related questions that clients have asked since the announcements.
Housing Measures in the Spring Budget 2020 Property Market
Housing was not front and centre in this Budget, but there were still important commitments. Sunak announced a £12 billion multi-year Affordable Homes Programme (AHP) and increased contributions to the Housing Infrastructure Fund. These steps indicate a stronger government focus on supply and development projects, relevant to borrowers exploring Development Finance or Commercial Development Loans.
Despite speculation, Sajid Javid’s proposed “mansion tax” did not appear, and tax reform relating to housing remains an open question for future Budgets.
Spring Budget 2020 Property Market and Stamp Duty
A key question from investors relates to stamp duty land tax (SDLT). Many anticipated a cut to invigorate the sector. Instead, the Chancellor announced a new 2% SDLT surcharge on overseas property buyers. This change, due to take effect on April 1st 2021, could directly affect many of our Foreign National Mortgage clients, including expats and international investors purchasing UK residential property.
Domestic landlords and individual buyers face no immediate SDLT change. However, some analysts expect the Autumn Budget might revisit permanent reform, particularly for high-value property. For ongoing guidance, see our resource on Purchase Mortgages.
When Does the Overseas Buyer SDLT Surcharge Start?
The 2% surcharge on non-UK residents begins on 1 April 2021. Transitional provisions apply if contracts were exchanged before 11 March 2020 but completed afterwards. In the short term, this may prompt a rush of foreign investors to complete transactions before the deadline, creating a temporary surge in London and other prime markets.
International appetite for UK property remains strong, but terms for expats and global purchasers could be impacted. Our brokers specialise in arranging tailored Expat Buy to Let Mortgages, ensuring investors remain competitive despite new surcharges.
Capital Gains Tax (CGT) Changes and Landlords
Landlords with multiple properties face adjustments to capital gains tax exemptions:
- The final exemption period is reduced from 18 months to 9 months.
- Lettings relief will only apply when landlords share occupancy with tenants, significantly narrowing its range.
While not sweeping reforms, these adjustments add complexity to landlord tax planning. As part of investment strategy, landlords may look to Buy to Let Remortgages to restructure borrowing efficiently in anticipation of higher taxation.
Bank of England Rate Cuts: Budget Timing and Mortgages
On the same day as the Budget, the Bank of England announced an emergency cut to 0.25%, representing the lowest base rate in UK financial history. This move directly benefits borrowers on tracker rate mortgages and signalled a fresh period of ultra-cheap borrowing.
For clients accessing Private Bank Mortgages or arranging High Net Worth Mortgages, bespoke terms can be negotiated in light of this rate reset. We anticipate increased transaction activity in the second half of 2020 as confidence builds.
Final Thoughts: The Spring Budget 2020 Property Market Outlook
The Spring Budget 2020 property market measures demonstrated the government’s focus on stabilising the economy during an unprecedented pandemic. While major housing reform was set aside, the SDLT surcharge for overseas buyers, CGT changes, and record-low interest rates all impact HNWIs, expats, and international investors.
For property investors, the key is agility: completing transactions ahead of SDLT changes, reconsidering tax strategy, and taking advantage of historically low borrowing costs. At Articus Finance, we continue to arrange bespoke financing — from Remortgages to Buy to Let Mortgages — ensuring our clients remain ahead of market shifts. If you wish to evaluate your property finance options after the Chancellor’s announcement, Contact Us for expert advice.
