Chancellor leaves door open to tax rises in pre-Budget speech amid concerns from the property sector

With the Budget only weeks away, Chancellor Rachel Reeves made an unusual choice to deliver a pre-Budget speech.

In her speech, the Chancellor said, “everyone will have to contribute to improve Britain’s finances” and did not rule out tax rises.

Property experts have warned the Chancellor against raising the tax burden on landlords, amid speculation over whether landlords could face paying national insurance on rental income.

More taxation and regulation

In her speech, Ms Reeves said she would make the choices necessary to “deliver strong foundations for our economy.” During a Q&A session with journalists after the speech, she hinted she would not cut investment in housing.

However, landlord organisation iHowz questioned this claim, saying Labour has already cut investment in housing.

A spokesperson for iHowz said: “Labour have failed to show realistic progress on their goal of 1.5m new homes this parliament, forced through the Renters’ Rights Act, which in turn has driven good landlords to leave the market and put up the stamp duty surcharge on landlords sourcing new homes to 5%.

“Instead of recognising the significant contribution that the private rental sector (PRS) has made in providing much-needed homes to address Britain’s housing crisis, Labour has chosen to double down on the efforts of George Osborne to curb the sector, with more taxation and regulation piled on the sector.

“It is little wonder that good landlords are selling up and choosing investments offering better returns and more favourable tax treatment.”

PRS needs to be part of the solution

iHowz says that rather than adding extra burdens, the private rented sector should be part of the solution.

The spokesperson said: “Good housing is considered a fundamental ‘social determinant of health’ and a critical piece of infrastructure that, when prioritised, can lead to a healthier, safer, and more productive society, easing pressure on currently stretched public funds.

“iHowz asks that the Chancellor follows through on the Pre-Budget speech by not increasing tax and regulatory burdens on the PRS and, instead, explores ways to encourage the PRS to remain part of the solution.”

The spokesperson adds if the government wants to improve productivity and address the housing crisis, the Chancellor must delay the burdensome Making Tax Digital requirements, remove the stamp duty surcharge and provide incentives to bring empty homes back into use.

Industry reaction to speech

Nathan Emerson, CEO at Propertymark, says the government must strike a balance in the Autumn Budget.

He said: “With increasing speculation about potential tax rises, it is crucial that careful consideration is given to avoid hampering growth within the housing market, as it is a central engine of the economy.

“It is encouraging to hear the Chancellor state that her Autumn Budget is aimed at boosting productivity. Any measures designed to ease the cost of living and positively impact the housing market would be very welcome news for consumers.

“However, with continued uncertainty ahead of the Autumn Budget regarding possible changes to Stamp Duty and National Insurance, both of which could directly affect landlords, these measures will be closely scrutinised. The Chancellor must ensure a careful balance is struck to promote future investment and enhance confidence in the sector, especially at a time when governments across the UK are pursuing ambitious housing targets.”

Matthew Thompson, head of sales at estate agency Chestertons, says the government must encourage investment in the buy-to-let sector.

He said: “The property market is in dire need of stability. What buyers and sellers really need is consistency rather than short-term headlines. Speculations over the Budget announcements have left very little hope for positive news, however, we would like the Chancellor to consider a potential stamp duty reform or relief, meaningful support for first-time buyers and incentives that encourage downsizers to move.

“The top end of the property market, which a lot of homes in London fall into, is being held back by high transaction taxes so any further taxation will not help restore confidence amongst buyers or sellers. Lastly, whilst the government has been focused on discouraging buy-to-let investment, we would like to see measures that encourage responsible landlords back into the market to help increase the number of rental properties.”