13:47 PM, 30th October 2024, About 24 hours ago 29
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In a move that could severely damage the private rented sector (PRS), the Chancellor Rachel Reeves announced in the Budget that the stamp duty surcharge on additional homes will increase to 5% from tomorrow.
The rise from 3% will hit landlord profits – and likely undermine desperately needed landlord investment in the PRS – and lead to fewer homes for rent.
ARLA Propertymark president, Angharad Truman, said: “We continue to see a growing disparity in the number of private rented homes available against a backdrop of increasing demand from tenants.
“Therefore, it is disappointing to see that the UK Government did not address this fundamental issue in its Autumn Budget and instead has announced yet another blow for landlords by increasing Stamp Duty on second homes.”
However, fears that landlords selling rented homes would have to pay a much higher rate of Capital Gains Tax (CGT) have failed to materialise in Ms Reeves’ first Budget as Chancellor.
Critics had feared that the higher rate of CGT would rise to 40% – up from 24% currently.
However, Ms Reeves announced that the lower rate of CGT will rise from 10% to 18%, and the higher rate from 20% to 24%.
But in some good news for landlords, the rates on residential property will remain at 18% and 24%.
Also, Capital Gains Tax rates on carried interest will rise to 32% from April 2025.
The Budget aims to raise taxes by £40bn and Ms Reeves also revealed that the inheritance tax threshold will be frozen by another two years to 2030.
That means the first £325,000 of an estate can be inherited tax-free – which rises to £500,000 if the estate includes a residence passed to direct descendants.
The move will also see that figure increasing to £1m when a tax-free allowance is passed to a surviving spouse or civil partner.
From April 2026, the first £1m of combined business and agricultural assets will continue to attract no inheritance tax.
For assets of more than £1m, inheritance tax will apply with 50% relief, at an effective rate of 20%.
The Chancellor confirmed a hike in employers’ national insurance from 13.8% to 15% – a ‘decision not taken lightly’.
However, the threshold has fallen to £5,000 – from £9,100.
That will hurt a lot of smaller business, critics warn, though Ms Reeves says the move will raise £25bn.
National Insurance, VAT and income tax ‘for working people’ have not been increased.
Other highlights from the Autumn Budget include:
Liam
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Sign Up13:45 PM, 30th October 2024, About 24 hours ago
That campaigning the NRLA did on our behalf went really well. Thanks Mr Ben Beadle. No mention of you by the chancellor, I noticed Shelter was mentioned though.
John Bentley
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Sign Up13:49 PM, 30th October 2024, About 24 hours ago
So the rent charged on any future properties purchased will have to be 2% higher. How does that help working people?
Martin
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Sign Up13:59 PM, 30th October 2024, About 24 hours ago
Once upon a time I thought I would gradually churn my properties to keep newer houses. In fact now I have enough equity in each property to sell and buy 2 more if I chose to do so.
What I have already actually chosen to do like many others is exit the business.
Extra stamp duty will no longer impact on me, but it sure as hell puts yet another hurdle in the way of someone starting a portfolio.
Someone needs to point out that a whole lot of nothing is still less than a little bit of something.
Rob Crawford
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Sign Up14:04 PM, 30th October 2024, About 24 hours ago
OK, so I will now sell and not re-invest in property or anything else. Pay off my mortgages and put surplus into premium bonds! It is inevitable that CGT will at some time be increased to match non residential properties, it's just a matter of when!
Jason
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Sign Up14:21 PM, 30th October 2024, About 23 hours ago
Guess it depends all down to the purchase price and rental rate plus all the other new crap coming our way. I target my ROI over 10years if I can’t make it works then I won’t invest. So the chancellor will get her 5% of nothing.
Sonny islam
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Sign Up14:33 PM, 30th October 2024, About 23 hours ago
Hi can someone confirm, if a house is bought via limited company has SDLT changed?
eg. a 190k house.
will it be 3% SDLT or 5%?
Godfrey Jones
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Sign Up14:57 PM, 30th October 2024, About 23 hours ago
Yes it will hit us Landlords but really only those intending to buy and sell or expand portfolios.
I feel it is more to deter holiday home buyers. Whether, along with additional CGT, it affects the property market will remain to be seen.
Personally, I think it’s time that Gov not only stopped its war on Landlords but started removing, one by one, previously implemented punitive measures imposed. It's also time this Gov realised just how much it needs Landlords in order to house the 4.6m private renters in this Country.
I think what Reeves has done is very short sighted and whilst Landlords will undoubtedly lose out, the ultimate losers will be Tenants.
TheMaluka
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Sign Up15:05 PM, 30th October 2024, About 23 hours ago
This tax hike will of course encourage landlords to finance new builds!
Whilst justified for second homes which remain empty for at least half the year, how is penalising property purchased for rental purposes going to aid the current housing shortage?
The war, sorry 'special military operation', on Tenants continues, for it is tenants who will pay the price.
GlanACC
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Sign Up15:16 PM, 30th October 2024, About 22 hours ago
Its not just landlords it will hit. Joe public who is buying a property and has an existing property but has to purchase the new property with an overlay before selling the old property will also pay the extra 2% - YES, this can be claimed back BUT its extra to pay out in the purchasing process. I suspect (indeed KNOW) a number of house sales will now fall through, especially as its 24 hours notice.
JaSam
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Sign Up15:23 PM, 30th October 2024, About 22 hours ago
Reply to the comment left by GlanACC at 30/10/2024 - 15:16
Bridging loan can be the option in this situation.