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.