The government’s Autumn Statement yesterday missed the opportunity to boost supply for the private rental sector, it’s been claimed.
Ben Beadle, chief executive of the National Residential Landlords Association, says: “The demand for private rented housing is massively outstripping supply. This will only worsen as growing mortgage rates make home ownership more difficult to afford.
“The Government has yet again failed to recognise the potential for housing to drive growth and deliver for the economy. The Chancellor should have focused on boosting supply by ending the Stamp Duty Levy on the purchase of new rental homes.
“Research by Capital Economics suggests that scrapping this could lead to a £10 billion boost to Treasury revenue. This would be as a result of increased income and corporation tax receipts. Instead, these swinging cuts to Capital Gains Tax allowances will dissuade investment for years to come.
“The last thing renters need is an effective further tax hike on the private rented. All this will do is discourage investment in the new homes to rent the country desperately needs and drive up the cost of renting.”
According to Zoopla, so far this year the demand for private rented housing in the UK is up 142 per cent compared with the five-year average, whilst the supply of such homes has fallen by 46 per cent. A similar trend has been reported by Rightmove who report that, in Q3 2022, tenant demand increased by 20 per cent compared with Q3 2021.
The trend of ever-increasing demand takes place despite the number of owner-occupied households in England having increased by over one million in the past five years.
Yesterday’s announcements included five that were directly relevant to the private rental sector.
- Halving the Capital Gains Tax annual exemption from £12,300 to £6,000 in 2023—24 and again to £3,000 in 2024-25 - a hit for landlords in particular. Tim Walford Fitzgerald, tax partner at HW Fisher says: “This is bad news for landlords, second home owners and those looking to sell their property as capital gains tax is applied at a much higher rate for residential property sales. Expect to see a decline in the number of disposals – people will hold off from selling their assets during unfavourable conditions. Or, if there is a delayed introduction for the new threshold, look out for a quick spike in sales as individuals and families try to beat the new implementation date.”
- The dividend allowance will be cut from £2,000 to £1,000 next year and then to £500 from April 2024. It means that by 2025, anyone receiving dividends above this amount (likely to include many landlords who have incorporated) will pay tax on them at a rate depending on how much other income they receive.
- Local authorities can raise council tax by five per cent without holding a referendum (that is three per cent, plus an additional two per cent if they have social care responsibilities). This is likely to be another pressure on private tenants and means band D council tax could rise from an average of £1,966 to as much as £2,064.
- Stamp Duty cuts announced in September will be time-limited, ending on March 31 2025. Hunt says: “This is to help the jobs and firms that rely on the housing market through the current challenges, while strengthening the public finances in the longer term.” Earlier this autumn former Chancellor Kwasi Kwarteng increased the threshold at which Stamp Duty is charged on residential purchases from £125,000 to £250,000 with the threshold for first-time buyers also up from £300,000 to £425,000 and to be used on purchases worth up to £625,000.
- Inheritance Tax thresholds frozen for an extra two years, making hundreds of thousands of home owners liable to IHT. The threshold currently stands at £325,000 with a further residential nil rate band set at £175,000. IHT is levied at 40 per cent above this level.
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I’m a Landlord. “Get me out of here”
Another Government chip away at the PRS LLs.
They will look back on some of these decisions when they realise that the PRS of properties available has shrunk due to LLs selling up.
I for one simply don’t accept the government’s and Councils constant anti LLs decisions.
As the LLs sell off there properties only about 15% are being sold on to other LLs meaning a massive downturn in PRS rental properties.
WHERE do the authorities think they are going to house all these people who can no longer find a property for their family’s.
That’s going to be B&Bs and Cheap Hotels and they will then be picking up the entire bill for all these families. Cheap Dear comes to mind.
Massive Massive problems just down the road.
But they know best. Or maybe not.
Not, I think.
It is amazing how wrong they are getting it in our sector and it makes you wonder what else they are messing up!
Extra costs for Landlord's means extra costs for tenants. Section 24 and licensing has already pushed up rates along with the cost of living. For those Landlord's, myself included, whom have mortgages this situation will become much worse. Put up rents further or sell!
Therefore less properties for the PRS and Landlord having to sell which will reduce their annual income though offset by lump sum from selling the house.
The Government need to wake up to this situation. And soon as there will be a lot of pain to come.
Mr Ben Beadle of NRLA can you please clarify what you mean about ending Stamp Duty on New Rental Homes ?.
Do you mean you are supposing the Developers Big new Boys taking over our Rental Business will Government Collusion. Building tens of thousands of high rise Flats.
Do you the purchase of any Home for Rental or is it to the exclusion traditional landlords who don’t buy newly built let’s be clear on this RNLA member.
I think he means the 3% levy charged to anyone or any company buying rental properties. When the 3% levy was imposed, they talked about making landlords exempt and only charging second home owners. This could be easily implemented by returning the 3% at 1%/year as you prove the property has been rented for 3 years. The government are just missing an opportunity to boost rental supply and all this levy does is push rents up as landlords look to recover their investment.
Supporting (pre-dict text) typo
They have sunk the PRS ship…. Down to Davy Jones Locker for the majority of us….. oh well, bit more CGT but at least I am out of this madness.
3rd property sold yesterday - another going through now. Sorry renters!
Well done, how are you finding your asking price stacking up against the current market sentiment?
I failed to sell one at auction. Waiting for a tenant to leave next month and also in the middle of an eviction process. I will defo sell one of these, most likely the one in Norwich as previously mentioned, in 2 minds with the one in Bedford but more likely to sell.
I am selling to clear mortgages, will stay a Landlord with the good tenants that I currently have and will review when and if they decide to leave, though my shortest tenancy will be 7 years and my longest 20 years!
Andy, big Auction House sale here in Norwich last month, several didn't sell bids being run up to just below reserve, many of these unsold lots are listed in their next sale next month, interesting times lay ahead
Tricia - Sensible, you’re at the vanguard of the mass exodus.
Prices have held up ok so far - selling just as the market started to slow. Even with 'realistic pricing' I am achieving significantly more than valuations 2 years ago.
Will be watching the market closely for the next ones - but it is a question I ask every time a tenant leaves - keep or sell? Sell is winning! Even with the tax rises announced yesterday, I believe taxes are only going to keep going up, so I am selling and taking the tax hit. Its still a decent profit.
Completely agree with your last comment. Good that values have stayed ok, so far the one i'm selling in Nottingham has sold for asking price, just hope it all goes through ok.
Most of us should be able to be flexible with the price due to the increases over last couple of years.
Tricia. The Government will be very happy with you doing what they want.
Stay in get hammered and bullied or get fleeced on the way out.
Duncan. I am sure what he means let’s hear from Ben, quite simply SD on rental homes why did the word New come into it.
Ah I see your question now Michael.
I'm with Tricia. I've sold 2 and I'm giving notice to another tenant today. I'm in Scotland though so who knows when I'll actually gain possession. Enough is enough. I'm outta here
Watch out , Beadle's about !!
Shane, well done any connection to your name sake Agnes RE Surveyor CEGB away back.
Michael, no connection to Agnes.
Probably Beadle had haemorrhaged members from his lofty 2%,or maybe the government has renaged on the k they indicated ! Or probably both.
No word back or correction from Mr Ben Beadle of the NRLA ‘
‘The Chancellor should have focused on boosting supply by ending the Stamp Duty Levy on the purchase of NEW rental homes’
What does he mean by ending SD levy did he mean remove the extra 3.% or have none at all. Certainly he said on NEW rental homes which means the new boys taken over with their Multi High rise Blocks Flats.
I have to ask the question is he working for the new Build 2 Rent Developers who seem now to be an organised cartel to driving us out for themselves to take over and has he turned his back on Private Landlords who pay their annual membership.
I think the additional dwelling supplement is here to stay. Effectively, the first year’s profit is taken away.
Surely the build to rent companies are funding the construction of their properties, rather than buying from a developer? So stamp duty would only be paid on the site, which is probably in commercial use before the redevelopment.
One positive of the Scottish ads is that if one buys six or more properties in a single transaction, ads doesn’t apply.
As for CGT, it’s just another thorn in our side. I believe the decision to exit is based on other factors, but it may accelerate the decision of some small landlords to exit before the annual exemption is removed altogether.
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