The Chancellor, Jeremy Hunt, on Wednesday presented his Spring Budget in the House of Commons. Hunt’s second fiscal policy proposal since he became Chancellor, it followed November’s Autumn Statement which announced changes aiming to correct surging inflation, fill a hole in UK finances, and calm the markets after the controversial mini-budget from his predecessor, Kwasi Kwarteng.
The Private Rental Sector had been eagerly awaiting the Budget in hopes that landlords and members of the lettings industry would not be overlooked by the chancellor. But there was disappointment among many who did feel that property and housing were not directly mentioned, and tangible changes for PRS were lacking.
Here are the key takeaways from the budget for letting agencies and landlords:
Prior to the release, rumours were swirling that Hunt may be delaying his planned rise to the energy price cap, to help households struggling to pay for rocketing gas and electricity bills.
This proved to be true as Hunt confirmed that the Energy Price Guarantee would remain at £2,500 for the typical household for the next three months.
There had also been campaigners who were calling on Hunt to invest part of the budget to help people, including landlords, make their homes greener and more energy efficient. However, this was not specifically addressed when the budget was announced.
On a broader note, the budget did address the economy, which has been forecast to grow by 1.8% next year. The chancellor also confirmed that we would avoid recession, and stated that inflation is set to fall to 2.9% by end of year.
The budget therefore does indicate a boost for the housing market, which will now expect to see house prices fall as buyers recalculate their budgets and more supply becomes available.
The budget’s revelations on increased funding for childcare could also mean that families will become more mortgageable, giving them increased opportunity to exit the rental market in the future.
The key takeaways on Tax were that the main rate of corporation tax, paid by businesses on taxable profits over £250,000, was confirmed to increase from 19% to 25%. Also, companies with profits between £50,000 and £250,000 are to pay between 19% and 25%. This may have an effect on property agencies direct business costs further down the line.
Hunt also named the Investment Zones – designated sites where businesses will benefit from time-limited tax incentives and streamlined planning rules to deliver investment, create jobs and build the homes that communities need.
They 12 zones will be; West Midlands, Greater Manchester, the north-east, South Yorkshire, West Yorkshire, East Midlands, Teesside, and Liverpool.
There will also be at least one investment zone in Scotland, one in Wales and one in Northern Ireland.
Disappointment with lack of tangible change for PRS
With regards to the current supply issues that are causing an adverse effect on renters who will not see change in the immediate future, the NRLA issued a response to the budget announcement that they felt failed to address the supply and demand crisis.
Chris Norris, Policy Director for the NRLA, said:
“The Chancellor spoke of growth yet did nothing to introduce the pro-growth measures that are necessary if the private rented sector’s supply crisis is to be addressed.
“The current system, under which landlords are penalised for providing new homes to rent, only makes it tougher for many renters to access good quality rental properties. Without a comprehensive review of how the sector is taxed, supply and demand issues will only become more acute as time goes on.”
Chief executive of Shelter, Polly Neate, also expressed dissatisfaction with the budgets absences of measures for the private rental sector, stating:
“Homelessness has almost doubled in the last 10 years and yet again we have a Budget that does nothing to help struggling renters who are drowning in debt and rapidly rising rents.
“It is outrageous that the government has chosen to keep housing benefit frozen at 2020 levels when its own figures show rents have risen by more than eight per cent in this time.”