It has been a busy Budget for the real estate sector today, particularly for the residential sector.  The big announcement was the proposal to abolish SDLT’s multiple dwellings relief (“MDR”).  This came as a surprise and for those seeking to rely on the relief for a completion on or after 1 June 2024, they may have been racing to exchange today to lock in MDR on the acquisition.  However, there was some good news for those trying to access the housing market.  The government is proposing to withdraw the furnished holiday letting regime and reduce the higher rate of CGT for those who pay CGT on selling residential properties as these are intended to improve access to housing. But elsewhere reform for SDLT was relatively light.  The government did not respond to lobbying in a few targeted areas. A downsizer’s relief and keeping the current lower thresholds beyond March 2025 were not mentioned.  In further good news the government gave the green light to a new non-authorised fund vehicle, to be called the reserved investor fund or “RIF”.

Budgets are normally stories of two halves.  The first half contains the headline-grabbing tax policy reforms that can be encapsulated in a snappy soundbite in the Budget speech, such as “Chancellor scraps the non-dom regime”.  The second half typically contains more detailed reform packages, which may involve a significant overhaul of a regime past its sell by date, a complex new initiative or a tightening of a measure that doesn’t work as well as it could.  The latter could be viewed as the “business as usual” reform of the tax system, including to make it simpler and to make the UK more competitive. If the Autumn Statement is anything to go by, and particularly bearing in mind the timing of the next General Election, we can expect the Budget on 6 March to be disproportionately focused towards the first half in the hope that carefully considered announcements will shift the dial on voting sentiment.  We expect the Budget to get very political and wonder whether 6 March may see further missed opportunities to reform the tax system.

The Government has announced a further series of proposed changes to the UK REIT rules as part of the wider review of the UK funds regime and published draft legislation. This third set of changes are earmarked for Finance Act 2024 and keep to the program of reform to modernise the REIT regime and generally to make it more accessible.