The Autumn Budget – what does it mean for renters, investors and landlords?

The Chancellor Jeremy Hunt’s autumn budget yesterday bought with it £30billion in spending cuts
and £24 billion in tax rises. It also has several implications to the property sector, some of which may
well impact on you. Because of this, we thought it would be beneficial to outline some of the key
factors from this, and give some context to each.

For Renters
The Chancellor has outlined that social rents will be capped at 7% from April 2023. (A social rent is
defined as rent which is subsidised by the government for people on low incomes. It is also referred
to as ‘fair rent’. This is protected and is charged to a resident with a secure tenancy.

This cap on social rent has been welcomed by many, as it will hopefully combat the increase in rents
which were set to rise at the consumer price index rate, plus 1%. This would have meant an 11.1%
increase, based on inflation levels of 10.1%, which were reached in September. Capping this rent will
mean that those on low incomes will hopefully have a buffer from the rises in inflation, and the cost
of living, which we have seen in recent months.

It should also be noted that this rent cap does not apply to shared ownership rents or the private
rental market.

There is also a proposed Energy Price Guarantee which will mean that renters’ energy bills will not
rise over £2,500 for an average household. However, this will increase to £3,100 in April 2023.

For Investors
For those who fund their property investments through their salaries, the news is not particularly
good. The personal tax threshold has been reduced. This means that higher earners will now find
that the 45% rate will be effective from the £125,140 salary bracket rather than the £150,000 level.
In real terms, this means paying, on average, more than £1200 a year. This will generate an
estimated annual revenue of £1.3 billion for the government.

Also, the stamp duty cuts (that we have reported on in our previous blogs) will only remain until
March 2025. For buyers, this means that they will continue to benefit from a stamp duty exemption
on the first £250,000 of a property purchase for over two years. The stamp duty threshold will then
return to £125,000. This is hoped to rejuvenate and keep the market moving.

For Landlords
Capital Gains Tax Threshold (CGTT) changes announced under the budget will hit landlords hard
when they come into effect next year. CGTT refers to tax which is paid when a landlord sells a
property, and from April 2023 this level will drop by half, from £12,300 to £6,000. It will then be
halved again from April 2024 to £3,000.

Landlords will, therefore, pay more tax on the profits that they make when they sell a property.

Corporation Tax – if you are a Limited Company Landlord then you will find that increases in
Corporate Tax will rise by 25% in April 2023. This could lead to higher tax bills for you.
Dividend Allowance cuts – there will be a cut to the dividend allowance from £2,000 to £1,000 in
2023, and this will drop further to £500 in April 2024. This is significant to Limited Company
Landlords who pay a dividend either to themselves or their shareholders.

For more information about how we can help manage your property portfolio, help you find your
next home, or apply for your HMO license along with how we can help develop, plan and manage
your HMO, please speak to our MD Douglas Fokuo. Details on how to do so can be found here.