Slim pickings for PRS in Hunt’s back-to-work Budget

Chancellor Jeremy Hunt has revealed his Budget plans but there was little in it aimed directly at the UK housing market.

The Private Rented Sector, in particular, was hoping for specific assistance in an effort to reduce the number of landlords leaving the sector and increase the supply of rental homes.

And many commentators had called for tax incentives to introduce further energy efficiency measures at rental properties.

But Mr Hunt chose not to step in and help landlords directly, deciding instead to concentrate on measures designed to tempt early retirees and parents back to work in a bid to grow the economy.

A three-month extension of the energy bill cap was widely predicted and warmly welcomed by those struggling with increased heating costs as was the forecast by the Office of Budget Responsibility (OBR) that inflation looks set to fall from 10.1% in January to 2.9% by the end of the year.

Energy price

The Government had planned to cut subsidies to energy bills at the end of March, but in a policy reversal, Mr Hunt announced that the Energy Price Guarantee would continue until July – limiting energy bills for an average household to £2,500 per year.

The Government’s planned increase in the main rate of Corporation Tax from 19% to 25% was confirmed but it was also announced that, for the next three years at least, company investments in technology and machinery will be fully tax deductible.

And, as a continuation of the Government’s levelling up agenda, 12 new investment zones across the UK were announced with tax breaks and other benefits worth £80m each over the next five years.

The main thrust of Mr Hunt’s fiscal plan was directed at stimulating growth and helping the ‘economically inactive’ back to work.

Childcare

The rising cost of childcare has long been considered a barrier to parents returning to work.

Working parents of three and four-year-old children are already entitled to 30 hours a week of free childcare in England.

In a package worth £5bn, the Chancellor announced a staged extension to the scheme with 15 free hours of childcare for two-year-olds in April 2024, and in September 2024 for those aged over nine months, then 30 hours for all from September 2025.

He also increased funding for school-age children to receive before and after-school care.

Childminders are to receive a £600 ‘incentive’ payment and those on Universal Credit will receive upfront childcare costs up to a maximum of £951 per child.

And turning his attention to people further up the age-scale, he announced a £63m ‘Returnerships’ programme  for over-50s who might wish to return to employment in a different sector.

Pensions

In an effort to retain more doctors and consultants in the NHS, Mr Hunt controversially abolished the tax-free limit on pension savings and although the annual allowance will remain in place, it was increased from £40,000 to £60,000. Labour has called this move a tax break for the wealthy and pledged to reverse it if they win power at the next election.

Other measures included:

• A commitment to increase the Defence Budget by £11bn over the next five years
• £200m for councils to fix potholes
• £900m investment in the UK’s AI sector
• £10m additional funding over the next two years for charities working to prevent suicides
• A 12-month extension to the freeze on fuel duty
• Tax breaks for the entertainment industry
• The abolition of the work capability assessment, allowing disabled people to take a job without fear of losing their benefit.
• From July, a commitment to charge the Pre-payment meter energy customers the same as those who pay by direct debit

Mr Hunt said this was a Budget for “long-term, sustainable, healthy growth that pays for our NHS and schools, finds jobs for young people, and provides a safety net for older people”.

But his opposite number, Labour’s Shadow Chancellor Rachel Reeves, said the Budget was a chance to unlock Britain’s promise and potential.

“But with growth downgraded, the hit to living standards the largest since records began, and a tax cut for the top 1%, they are just papering over the cracks.”

Reacting to the Budget, Chris Norris, Policy Director for the National Residential Landlords Association, said: “The Chancellor spoke of growth yet did nothing to introduce the pro-growth measures that are necessary if the private rented sector’s supply crisis is to be addressed.

“The current system, under which landlords are penalised for providing new homes to rent, only makes it tougher for many renters to access good quality rental properties. Without a comprehensive review of how the sector is taxed, supply and demand issues will only become more acute as time goes on.”

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