Little Budget Cheer for Landlords and Tenants

For landlords and tenants, there was mixed news in Chancellor Jeremy Hunt’s Spring Budget as he unveiled his plans in what is believed to be his last budget before a general election is called.

More Money In Tenants’ Pockets?

Landlords will at least be encouraged by the improvements in affordability which should filter through to the budgets of their tenants and prospective tenants. Jeremy Hunt announced a second cut to National Insurance, down from 10% to 8% from April. It had already been cut from 12% to 10% in November’s Autumn Statement. An extra 2p reduction should give the average earner an extra £450 a year in their pockets or £900 a year for 27 million employees when combined with the autumn reductions.

For those tenants on higher pay, child benefit was also overhauled. This saw the £50,000 maximum that can be earned before a proportion needs to be paid back now rise to £60,000 – a move which will positively impact 170,000 families.

The threshold for full repayment, meanwhile, rises from £60,000 to £80,000 from April. Hunt said these changes equate to an extra £1,300 a year for nearly half a million families with children.

The freezing of duties on fuel and alcohol duty will also help to relieve pressures on consumers, and therefore give them more breathing space when it comes to rental affordability.

Looking further ahead, Hunt said the UK was likely to hit its inflation target of 2% earlier than expected. If this is true then we may see interest rate cuts and mortgage rates come down sooner than expected, which could mean more people move to buy. However, with strong rental demand in the market this is likely to have little immediate effect on landlords.

But Challenges For Landlords

But a clampdown on short lets and multiple dwellings relief could be bad news for some landlords. In his speech, Hunt said he had looked closely at the country’s Furnished Holiday Lettings tax regime and that he was concerned that this was leading to a lack of availability of properties for long-term rental by local people and as such would abolish it.

This will see the ending of relief for costs such as furnishing short-term lets as well as the claiming of full mortgage interest relief and lower capital gains tax. The FHL tax will end in April 2025.

Meanwhile the stamp duty relief available for those who buy more than one dwelling in a single transaction – Multiple Dwellings Relief – was being regularly abused, he claimed, so he will abolish that too.

However, the reduction in capital gains tax announced by the chancellor, down from 28% to 24%, could encourage more landlords to invest by making buy-to-let investment more attractive, as well as potentially increasing the volume of properties on the market.

We Can Help

At Progressive Lets we are experts in the rental market in the Peterborough area and help landlords find and manage properties within a 50-mile radius. We manage HMOs all over the Cambridgeshire, Northamptonshire and Lincolnshire areas and also offer HMO management services, closely managing rental accounts and maintenance issues at competitive rates. Get in touch to find out more.