We knew there would be changes for property, and Jeremy Hunt didn’t hold back by explaining he will be introducing a raft of changes aimed at "tackling inflation and keeping mortgage rates down". Here's what I think landlords need to know about the new measures.
Change to capital gains tax relief
A large change will be the halving of Capital gains tax relief, this means that from 2023, the Annual Exempt Amount for capital gains tax will be cut from £12,300 to £6,000, and then cut again to £3,000 from April 2024. This is not positive news for landlords, second homeowners and those looking to sell their property as capital gains tax is applied at a much higher rate for residential property sales.
Cut in dividend allowance
Another area that could hit landlord pockets is the cut in dividend allowance, this will change from £2,000 to £1,000 in 2023, and then drop further to £500 in April 2024. Many landlords who own properties in Ltd companies and pay themselves in dividends could be affected by this.
Stamp duty
The stamp duty cut announced by Kwasi Kwarteng will remain for a limited time, as the OBR expects housing activity to slow over the next two years. The threshold before stamp duty is paid will stay at £250,000, up from the previous threshold of £125,000 - but now for a time limited period until March 2025.
Social housing sector rent cap to be introduced
The social rented sector is currently expecting rent hikes of up to 11% next year, which is why the government has announced a 7% cap on rent increases for social rents in 2023-24. This will help tenants save around £200 next year.
Energy price guarantee extended for a further 12 months
The energy price guarantee will remain in place for a further 12 months from April 2023, but the price will increase to £3,000 per year for the average household, meaning an average of £500 support for every household in the country.
The chancellor will also introduce additional cost of living payments next year:
£900 to households on means tested benefits
£300 for pensioner households
£150 for those on disability benefits
£1 billion of funding for the household support fund, extending the support for a further 12 months
All in all, we expected a hit within property and the measures announced last week are in line with this.
Angharad Trueman FARLA - Managing Director
If you found this blog interesting, try my blog on Rental Reform HERE.