On Wednesday the Chancellor delivered his annual Autumn Budget announcement, alongside a financial report from the Office for Budget Responsibility. And while it may seem that the budget was a little 'housing-light', there are a number of ways it will affect the property market.
1. Huge demand for rental accommodation will continue
As the Chancellor struggles to tackle inflation, the UK is seeing higher mortgage rates, which is forcing many aspiring homeowners to delay the purchase of their first home and opt for rental property instead. This is good news for landlords, who will continue to see plenty of opportunities to make good returns due to the heightened appetite of tenants.
Furthermore, today’s announcement of a consultation into new permitted development rights which will allow one house to be divided into two flats providing the exterior remains unaffected is great news, providing property investors to add more homes to their portfolio and help solve the housing crisis by offering rental solutions.
2. Local Housing Allowance provides further opportunities for landlords
Today’s announcement that the Chancellor will invest £1 billion to ensure that local housing allowance (LHA) rates will cover the bottom 30% of market rents for the first time since 2020 is great news! This means that more landlords can rent to those receiving LHA or offer social housing solutions and provide accommodation for renters across the nation.
3. Self-employed landlords will receive tax cuts
Over the past few years, the legislation in Section 24 of the Finance Act 2015 has caused a real headache for landlords, with many calling for it to be scrapped. Whilst this hasn’t been considered, it’s not all bad news for landlords!
You can still build a very profitable portfolio by buying into a limited company, which consists of no Section 24 - plus you can ensure you’re not trading time for money! Today’s announcement of tax cuts including an abolishment of class 2 national insurance will help save self-employed landlords and letting agents up to £350 which is great news, especially for those with larger portfolios.
4. More opportunities for first-time buyers
The extension of the 95% mortgage guarantee for 18 months will provide huge support for first-time buyers who are looking to get on the property ladder. This means that first-time buyers and current homeowners can purchase properties up to £600,000 with a 5% deposit on both new build and existing homes.
Abi Hookway, Managing Director of Redmayne Smith adds: “Despite the economic downturn, the property market remains resilient, and our clients are still investing in the UK property market as it offers real value, especially with the high demand for rental accommodation.
“The tax cuts announcements can only help wider confidence in the property market. However, we would ask the Chancellor to do more to support aspiring landlords with further cuts to tax on property as we passionately believe the property sector is the heartbeat for UK economic recovery.”