Autumn Statement Impacts Landlords

Autumn Statement Impacts Landlords

“Autumn Statement”

Autumn Statement Impacts Landlords

In a much-awaited Autumn Statement, Chancellor Jeremy Hunt set out the government’s tax and spending plans.

As predicted, it involved some large tax rises and spending cuts.  This was because Hunt aimed to fill a fiscal black hole to the tune of £55 billion – caused by Covid, Brexit, the war in Ukraine, soaring inflation and the disastrous mini-Budget from Liz Truss and Kwasi Kwarteng.

Hunt said he was delivering a plan which would tackle the cost-of-living crisis and rebuild the UK economy. He also said he would be prioritising stability, growth and protecting public services.

His speech did not have much to say about housing specifically. However Hunt did set out a number of measures that will directly affect landlords.

Below, we take a look at what these were and how the Autumn Statement impacts Landlords.

Capital Gains Tax (CGT) allowance halved

The Chancellor announced that he would more than halve the tax-free allowance for capital gains in the next tax year (2023-24), reducing it from £12,300 to £6,000. In the next tax year (2024-25), it will be halved again to £3,000 in 2024-25. Hunt said this was to make the tax system fairer and restore the public purse.

It will be those landlords seeking to sell their homes who will be most affected by this change, with CGT charged at a much higher rate for residential property sales.

More landlords could look to leave the sector earlier than planned as a result of the move. This, in turn, would have a negative impact on rental supply.

“These swingeing cuts to Capital Gains Tax allowances will dissuade investment for years to come,” Ben Beadle, CEO of landlord trade body NRLA, commented, saying that it will deter investment in new rental homes and grow the cost of renting.

Greater tax load for higher earners

Hunt also used his Commons speech to reveal that higher earners will begin paying the top rate of tax (45%) when they earn £125,140, down from £150,000 before.

As a consequence of this, more landlords could be forced into the highest paying tax bracket. This is likely to then have an impact on the profits they can make because of the changes to mortgage interest tax relief which were first introduced in April 2017.

Hunt announced other tax changes in his address.  He stated that Inheritance Tax thresholds will be frozen for a further two years.  As a result, hundreds of thousands of home owners remain subject to paying this tax.

Time-limited stamp duty cut

In a much more unexpected move, Hunt said the recent cuts to stamp duty would be time-limited. The time limit ceases on 31 March 2025.

For the next few years, there is now effectively another stamp duty holiday – something which will encourage more buyers, including landlords, to take advantage of the potential savings on offer.

Kwarteng, in his now infamous mini-Budget, had increased the nil rate threshold for stamp duty from £125,000 to £250,000. He also upped the threshold at which first-time buyers pay stamp duty on their first home to £425,000 from £300,000 on purchases worth up to £625,000.

But that will all come to an end in March 2025, which could lead to a late rush for homes before the effective holiday ends.

Hunt’s wide-ranging speech, which lasted for nearly an hour, also included a number of other measures. These ranged from electric cars to the energy price guarantee, explained in much greater detail here.

Here at Callaways Estate Agents, we will do all we can to help you complete a smooth let. We operate across the South Coast, including in Falmer, Worthing and Brighton & Hove, and have the experience and knowhow of the local area to help you set the right price and attract the best kind of tenants.

How has the Autumn Statement impacted you as a Landlord?  Are you thinking of reducing your rental portfolio?  Before you do, get in touch with us  to find out about what we can offer  please get in touch with us today.

You can also get a free, instant online valuation of your home, to give you an idea of how much rental your property is worth, or the value of your home, by clicking here.