13:47 PM, 30th October 2024, About 22 hours ago 28
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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:
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Sign Up15:26 PM, 30th October 2024, About 21 hours ago
Reply to the comment left by John Bentley at 30/10/2024 - 13:49The rent charged should be potentially higher.
If you paid an effective stamp duty of 6% before and now you have to pay 8%, then your stamp duty costs have gone up by a third.
This is an extra cost and an outlay, involving more money at risk.
2% would be the minimum, but since this is designed for the landlords to sell to first time buyers, rents will start rising as the shortage exacerbates.
Jo Westlake
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Sign Up15:51 PM, 30th October 2024, About 20 hours ago
Reply to the comment left by GlanACC at 30/10/2024 - 15:16
The biggest problem is the time limits. The previous house must be sold within 3 years of buying the new one.
That may sound like a long time but plenty can go wrong with chains, conveyancing delays, interest rates, etc.
If someone decided to rent out the old one for a while just to make sure the new one was an improvement there could be lengthy delays regaining possession.
It seems like a massive gamble on nothing going wrong. How many people are willing or able to take the risk?
moneymanager
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Sign Up17:02 PM, 30th October 2024, About 19 hours ago
None of this is really neccessary, if you consider the totally incontinent extent of government expenditure on such as unused Nightingale hospitals, useless and PPE, not to mention the criminal extent of warmongering, £40 bn isn't even a drop in the ocean, how about stopping doing 'daft stuff' and getting those who fail, like those in the Horizon scandal, be made to Puck up the tab?
JaSam
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Sign Up17:05 PM, 30th October 2024, About 19 hours ago
Reply to the comment left by Sonny islam at 30/10/2024 - 14:33
5% applies to ltd co and/or additional in personal name
Cider Drinker
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Sign Up20:45 PM, 30th October 2024, About 16 hours ago
This will reduce the number of properties in the PRS.and increase rents.
Christopher Lee
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Sign Up21:22 PM, 30th October 2024, About 15 hours ago
Reply to the comment left by Sonny islam at 30/10/2024 - 14:33
5% and it always applies to residential, ie including the first property.
Peter Merrick
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Sign Up21:52 PM, 30th October 2024, About 14 hours ago
I'm guessing that when landlords sell up like they do inevitably for retirement or whatever, there will be no other landlords willing to take on the property, so tenants will have to be evicted and homeless when they might otherwise have stayed housed.
Or they will have to pay a higher rent to cover the 5+% SDLT that will otherwise wipe out the first 5 years' return on investment for the new landlord.
Good job, Rach!
JamesB
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Sign Up23:28 PM, 30th October 2024, About 13 hours ago
I'm just glad that CGT didn't rise. It turns out that selling btls after 25 years feels very good. I issued my next batch of s21s this afternoon, literally as Reeves finished speaking.
I am actually starting to like Labour because all their anti landlord rhetoric has helped me make the decision to cash in and maybe move to a different sort of life where I am not on call 24/7 and spending my life cleaning up after people.
For decades I have been the multimillionaire that dresses in rags, unblocks loos, sorts out tenant squabbles, cleans mould, drops anything on a phone call to fix other people's issues, often caused by their own stupidity. Why on earth would anybody want to pay even more stamp to buy into that, when being London based with houses my gross yields are about 4%, LOL. Good luck Govt.
Stella
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Sign Up23:34 PM, 30th October 2024, About 13 hours ago
Reply to the comment left by Peter Merrick at 30/10/2024 - 21:52
Increasing rents to cover costs may not be that easy with the RRB
I think that Tribunals will keep rents low because they will set rents to refect the lower end of the market and Generation rent and Shelter will encourage tenants to have their rents assessed probably as soon as they take the tenancy.
SimonP
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Sign Up4:00 AM, 31st October 2024, About 8 hours ago
"The rise from 3% will hit landlord profits" - who wrote this nonsense?
SDLT is not a charge against income, therefore LL's profits will not be affected. It is considered to be a cost of acquiring property amd therefore can generally only be deducted when calculating capital gains (or losses) for CGT purposes.