Landlord Reactions To The 2017 Autumn Budget

The key headlines affecting UK landlords are:-

RESTRICTIONS ON FINANCE COST RELIEF

Disappointingly, there where no amendments suggested to the legislation which restricts finance cost relief for private landlords under Section 24 of the Finance (No.2) Act 2015, which remains in place and will continue to be phased in until the 2020/21 tax year, at which time no finance costs will be able to be offset against rental income.  The 20% tax credit for disallowed finance costs was also unchanged and there was no extension of the restrictions to Limited companies. There were no changes to incorporation relief or SDLT relief for partnership incorporation. Whether this will result in more landlords incorporating their businesses remains to be seen.

PERSONAL ALLOWANCES INCREASED FROM APRIL 2018

Nil rate income tax band to increase to £11,850

Basic rate income tax band increased to £46,300

INDEXATION ALLOWANCE FOR COMPANIES

This will be frozen from January 2018.

CORPORATION TAX

The trend of reducing corporation tax is confirmed. It was 20% last year, 19% this year and is scheduled to reduce to 18% next year and 17% the year after. No change in this regard.

EMPTY PROPERTIES

Councils to be granted the right to charge a 100% Council Tax premium on empty properties.

STAMP DUTY LAND TAX

SDLT abolished for all First Time Buyer purchases up to £300,000

FTB purchases up to £500,000 maximum will also be free of SDLT for the first £300,000.

HOUSE BUILDING

£44 billion in government support, including loan guarantees announced to target building 300,000 new homes a year by the mid 2020s.

These funds include an extra £2.7bn to more than double the Housing Infrastructure Fund.

Compulsory purchase of land banked by developers for financial reasons

A review of the gap between planning permissions being granted and housing building starting. It will report for next Spring’s economic statement.

The Chancellor said: “Solving the housing challenge takes more than money.” He wants to look at planning reform focusing on the urban areas where “people want to live and where most jobs are created. In particular, building high quality, high density homes in city centres and around transport hubs.”

5 new garden towns to be announced.

LONGER TERM TENANCIES CONSULTATION

The Chancellor announced a consultation in regards to encouraging landlords to offer longer term tenancies. Wouldn’t it be great if we could persuade Government to make s24 concessions for landlords who offer a 5 year Deed of Assurance? Note that Deed of Assurance doesn’t affect mortgage lending but longer term tenancies does.

UNIVERSAL CREDIT CHANGES

Government to remove the 7 day waiting period at the start of a new UC claim

One month’s payment advance will be possible for cases of hardship after a minimum of 5 days.

VAT THRESHOLD

Despite threats to bring this down the threshold of when trading businesses, such as letting agents, have to register for VAT will not change for 2 years at £85,000.

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