15:57 PM, 17th November 2022, About A year ago 2
The much-anticipated Autumn Statement has seen the Chancellor of the Exchequer, Jeremy Hunt, delivering a mixed bag of tax rises and policy changes.
And now the property sector has seen what the potential impact of it will be – and not everyone is happy.
And that goes for landlords too with the senior investment and markets analyst at investment firm Hargreaves Lansdown, Susannah Streeter, saying: “Entrepreneurs are being penalised with the increase in taxes on both capital gains and dividends, and those people who have diligently invested over the long term to build up their financial resilience will no doubt feel unfairly swiped by this grab from profits.
“For buy-to-let investors who own property as part of a limited company, these changes could be a triple whammy, coming on top of rises in corporation tax.”
She added: “They will not only have to pay more tax on dividends on profits from rent, but now that CGT has been aligned with interest rates and they sell up, they could be faced with a hefty bill in just one hit.
“This could discourage them from selling, causing parts of the housing market to potentially seize up.”
Her colleague Sarah Coles, a senior personal finance analyst, said: “Property buyers will have been thrown into a quandary by the announcement that the stamp duty cut will be reversed in 2025.
“This could be a useful short-term boost to the market.
“By moving from an open-ended stamp duty cut to a limited opportunity, it could hurry through more sales, and help to keep the market ticking over until March 2025.”
However, she adds that this may not be the best outcome for buyers because the market is sending out signals that they might not want to buy now because we could be reaching the peak for house prices.
The National Residential Landlords Association (NRLA) says the government has missed a great opportunity to boost housing supply in the UK by cutting the Capital Gains Tax allowance and retaining the rented housing Stamp Duty Levy,
Ben Beadle, the NRLA’s chief executive, said: “The demand for private rented housing is massively outstripping supply.
“This will only worsen as growing mortgage rates make home ownership more difficult to afford.”
He added: “The Government has yet again failed to recognise the potential for housing to drive growth and deliver for the economy.
“The Chancellor should have focused on boosting supply by ending the Stamp Duty Levy on the purchase of new rental homes.
“Research by Capital Economics suggests that scrapping this could lead to a £10 billion boost to Treasury revenue
“This would be as a result of increased income and corporation tax receipts. Instead, these swinging cuts to Capital Gains Tax allowances will dissuade investment for years to come.”
The stamp duty issue is also echoed by Nathan Emerson, Propertymark’s chief executive, who said: “Our member agents say the raised Stamp Duty threshold has had a positive effect on the confidence of their buyers and sellers, so we’re naturally disappointed it will be phased out by 2025.
“Stamp Duty is not only a barrier to entry to the property market, but it also restricts downsizers from releasing much needed family homes for second steppers.
“Bands that better represent house price growth and affordability are key to keeping the market moving.”
Mark Harris, the chief executive of mortgage broker SPF Private Clients, said: “At least we know that the stamp duty cuts will be in place for two years, even if they will then be removed, so it shouldn’t lead to a short-term spike in activity as people try to take advantage.
“With regard to CGT, the changes could have been so much worse for landlords and second homeowners, with fears that the Chancellor would increase the rate at which CGT is charged rather than tweaking thresholds.
“These changes are unlikely to persuade landlords to sell up before the lower threshold is introduced in April as it will mean hundreds of pounds of extra tax to pay, as opposed to tens of thousands of pounds, so will have a relatively small impact when people come to sell.”
Jeremy Leaf, a north London estate agent and a former RICS residential chairman, said: “As with all these financial statements, sometimes it’s as much what the Chancellor doesn’t say as what he does, with the full implications becoming apparent at a later date.
“The capital gains tax changes are disappointing as they could have a significant impact on the rental sector.
“The fact is that we need landlords; everyone knows rents are too high and there are not enough affordable homes to sell or for rent.
“We want to encourage landlords to stay in the sector and new ones to enter the market, reducing the upwards pressure on rents and stemming the flow of departure.”
He added: “Hopefully, landlords won’t sell now before this measure is introduced, as that will be bad not only for the rental market but the sales market too, as it will increase supply in the latter, reducing property prices more rapidly and therefore undermining confidence.
“If properties flood the market as a result, it won’t be good for sales or lettings.”
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