Landlords missed out on a predicted Christmas bonue in the Chancellor’s Autumn Statement.
Jeremy Hunt made general tax and spending commitments that may help the most hard-pressed tenants but there was little targeted support for the sector as a whole.
Before he delivered his speech, there were rumours of cuts to Stamp Duty Land Tax, Inheritance Tax and Capital Gains but in the end he cut 2% off employee national insurance (which drops to 10%). This means an extra £450 a year for people earning £35,400.
Mr Hunt also introduced a 1% reduction in Class lV NI contributions for the self-employed (saving on average £192 per year) and the abolition of their Class ll contributions said to be worth £350 to the average self-employed worker.
He also increased the National Living Wage to £11.44 an hour from next April and raised benefits by 6.7%.
The biggest boost for some tenants was the ‘un-freezing’ of Local Housing Allowances which he raised to the 30th percentile of area housing market rents. Mr Hunt said this would benefit tenants claiming the allowance to the tune of £800 a year. Landlords and letting agents have been calling for the LHA to be increased for years and many believe it is long overdue with rents continuing to rise all over the country.
However, there was no big tax break for landlords, many of whom have been lobbying for full relief for their Buy To Let mortgage payments. And there was no other specific financial incentive to encourage them to keep their properties rented inside the PRS which is suffering from a chronic supply shortage.
One novel new measure that Mr Hunt announced was a consultation on a new development right which would allow property owners to convert a house into two flats. This may positively impact landlords in the longer term.
On the sales side, although there was no re-introduction of the popular Help to Buy initiative, the Mortgage Guarantee Scheme for 95% LTV products which was due to end in December, was extended by 18 months to the end of June 2025.
While good news for some, lenders report that many would-be buyers are saving up for the lower rate mortgages which go with higher deposits.
National Living Wage rates increased
Other main measures outlined in the statement included planning reforms designed to increase the massive housing supply shortage. He said the Government would invest £110 million in nutrient offsetting schemes – largely considered to be barriers against construction in many parts of the country. And he plans to invest a further £32 million to tackle backlogs on local authority planning departments.
Critics have claimed that despite introducing 110 measures for growth, there was precious little in the Autumn Statement for housing when the PRS and many first-time buyers were looking for targeted support.
Other key measures included:
- £4.5bn investment in manufacturing between 2025 and 2030
- Mandatory work placements for jobless people if they don’t find a job after 18 months
- Increasing the state pension by 8.5%
- Making permanent the measure that offsets business investment against tax
- Business rate discounts for the hospitality, retail and leisure sectors worth £4.3 bn
- Three new investment zones in England and one in Wrexham, Wales
- A package £4.5bn worth of measures to deliver net zero.
- A pledge to explore options for the sale of Government-owned Natwest shares
Mr Hunt based his calculations for the Autumn Statement on the forecast from the Office of Budget Responsibility who reported that inflations was set to fall to 2.8% by the end of 2024 and will not drop below 2% until mid-2025. This is likely to keep interest rates higher for longer. It predicts the base rate is likely to stay at around 4% until 2028.
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