Budget 2021 – Landlord Reactions

Budget 2021 – Landlord Reactions

14:05 PM, 27th October 2021, About 2 years ago 17

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No Nasty New surprises were announced for Landlords in Chancellor Rishi Sunak’s 2021 Budget speech to Parliament today.

A key concern for landlords is inflationary pressure having to be released by the Bank of England increasing interest rates. The Office for Budget Responsibility (OBR) is predicting CPI inflation to average 4% over the next year. However, the Chancellor does not see this as a medium-term problem that must be immediately tackled by the Bank of England. He sees it as the sudden post lockdown recovery of demand not being matched in speed by the recovery of supply, exacerbated by the supply chain crises and a doubling of energy prices caused again by supply issues.

For tenant affordability, the National minimum wage will increase 6.6% from £8.91 to £9.50 next year and the Universal Credit taper rate is being cut 8% from 63% to 55% from December 1st this year. This cut in taper rate will more than offset the £20 per week temporary increase in UC being stopped for working families.

National insurance and Dividend tax rates are still increasing the planned 1.25% paid from April 2022.

Corporation tax is still planned to increase to 25% by April 2023. However, small businesses with profits of £50,000 or less will be maintained at the current rate of 19%. There will also be a taper above £50,000 so that only businesses with profits of a quarter of a million or greater will be taxed at the full 25% rate. That means only 10% of all companies will pay the full higher rate.

£5bn will be spent removing unsafe cladding. This will be funded through a Residential Property Developers Tax levied on developers with profits over £25m at a rate of four per cent. 31 housebuilders made that much profit in 2019.

£550m to tackle the Courts backlog

£11.5bn will be spent building 180,000 affordable homes

£640m will be spent tackling rough sleeping and Homelessness.

There will be a 50% Business Rate discount for Leisure

The planned fuel duty rise has again been frozen

The OBR forecast that our economy will grow this year by 4%, by 7.3% in 2022, then 1.7%, 1.6% and 1.7% in the last three years of the forecast.

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Neil Patterson

14:32 PM, 27th October 2021, About 2 years ago

Director of Benham and Reeves, Marc von Grundherr, commented:

“Disappointing to see such a brief mention for the UK property market in today’s Budget.

The Chancellor has chosen to give the sector a bit of the cold shoulder with just a handful of headline figures, clearly believing his job is done having fuelled house prices to record highs via the recent stamp duty holiday.

We need more homes to satisfy our ever-growing appetite for homeownership and an insignificant level of brownfield development is more of a slap in the face than it is an outstretched hand

As for the £11.5bn pledged for 180,000 affordable homes, it’s a start, but hardly news given it was announced by Robert Jenrick a year ago.

It simply isn’t enough and with the government consistently failing to meet their previous housebuilding targets, it will be a miracle if we see a brick laid on brownfield land or a meaningful level of affordable homes delivered in our lifetime.”

Managing Director of Barrows and Forrester, James Forrester, commented:

“Time and time again we’ve seen the government pledge to fix the housing market using recycled rhetoric and funding from previously announced initiatives. Today was no different and reading between the lines, we can expect to see them continue to over promise and under deliver in their attempts to address the housing crisis.

While Boris Johnson might not be a fan of recycling, his chancellor certainly is and so the 180,000 new homes pledged today is certainly no step forward.

The only bone thrown to a nation of ravenous homebuyers starved of housing stock has been a scrap of properties built on brownfield sites.

According to the MHCLG, there are some 36,000 hectares of brownfield land across England alone, enough to deliver over 1.3m new homes. So even if the government does make good on its promise, it’s just a fraction of what they could, and should, be building.”

Tim Rogers

15:00 PM, 27th October 2021, About 2 years ago

Does anyone know how corporation tax will be applied if your company shows a normal annual profit below £50,000, making your tax rate 19%, when a property sale pushes the profit over the threshold?

To clarify, assume for this discussion:-

Company annual profit £35,000
Property sale profit £100,000
19% band upto £50,000
20% band £50,001 - £100,000
21% band £100,001 - £200,000
22% band £200,001 - £400,000
(These bands are complete fiction)

As the normal company annual profit is below £50,000 which way would this be dealt with?
A). 19% of £100,000 = £19.000
B). 19% of £100,000 - (£50,000-£35,000)
19% of £85,000 = £16,150
C). 19% of (£50,000-£35,000) = £ 2,850
20% of £50,000 = £10,000
21% of £70,000 = £14,700
£ 27,550

My pessimistic self suspect option C is most likely.

david porter

15:09 PM, 27th October 2021, About 2 years ago

Do you know the storey of Jospeh Kennedy sr and the shoeshine boys?
Today everybody and his dog wants to buy property. Many are over leveraged and there will be tears when interest rates go up.
Remember the Bank of England Lifeboat?
Google both lessons from history.


16:54 PM, 27th October 2021, About 2 years ago

Be grateful, you'll never ever get a budget like that from the capitalist hating party's on the opposite benches

Mick Roberts

5:52 AM, 28th October 2021, About 2 years ago

That UC taper rate cut is nowhere near enough.
I see these people every day & they say I worked an extra day for just this, it's not worth it.

I want to know who knows about this Corporation tax 25% taper rate, I've not been told any definite rates/amounts certain rates kick in. Hopefully someone in the know listening.
Oh I see, Tim is asking a sideways similar question too.


14:33 PM, 28th October 2021, About 2 years ago

Does it really make that much difference? I've had a tenant apply who has taken 'voluntary liquidation' as I'm not quite sure what that is - would it make a big difference to rental payments?

Shining Wit

16:49 PM, 28th October 2021, About 2 years ago

Please note that the £5bn announced to remove unsafe cladding is the same £5bn that has previously been announced several times (so nothing new here then).
It’s a good sound bite tho’.

As stated, it is just for removing unsafe cladding – so it doesn’t cover any of the plethora of other safety faults that will also need to be fixed to actually make the buildings safe.

And, of course, it doesn’t include any buildings under 18m – at least they are eligible for ‘forced loans’ which, at £50pcm will take 100 years to repay an interest free loan of £60k, 150 years for a more probable £90k remediation bill.

Protecting leaseholders from unaffordable bills - or maybe not...

If you are interested to understand more, please listen to the closing arguments to last year’s evidence of the Grenfell Inquiry.

Simon Lever - Chartered Accountant helping clients get the best returns from their properties

16:37 PM, 31st October 2021, About 2 years ago

Reply to the comment left by Tim Rogers at 27/10/2021 - 15:00
Corporation tax is payable on company gains as if it were other taxable profits.

"Normal" profits of £35,000 plus gain of £100,000 gives total taxable profits of £135,000.

This is taxed at £50,000 @ 19% and then £85,000 ay 26.5% (the marginal rate to take the tax rate to 25% at over £250,000 of profits).

Total tax due £32,025.

This assumes no associated companies and a full year of trading. You should be able to ask your accountant about this.

New rates of tax start from 1 April 2023 so there is still some time to plan and sell property before then. Any gains would be taxed at 19%. If the company year end is not 31 March then it is a bit more complicated for the year straddling 1 April 2023.

Old Mrs Landlord

9:02 AM, 1st November 2021, About 2 years ago

It seems the landlord community were right to fear additional taxation in last week's Budget: I read this morning (Property Investor Post) that the OBR's detailed breakdown of Budget changes states that the buy-to-let surcharge on SDLT rose to 4%! Apparently this measure was only pulled at the very last minute so anyone intending to increase their portfolio has narrowly dodged a bullet, but it does give an indication that the government still has us in its sights.

Whiteskifreak Surrey

10:43 AM, 1st November 2021, About 2 years ago

Reply to the comment left by Old Mrs Landlord at 01/11/2021 - 09:02
Boris the landlords' friend...
Ha ha ha ha ha ha
Those who thought so should hang their head in shame

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