If you work in the property industry, have a mortgage or are thinking of moving home soon, the annual Budget announcement is something to tune into. In March 2023, the Chancellor addressed a nation wondering if - and how – the Government was going to make life more affordable.
Those that didn’t tune in subsequently asked Open Property Group ‘is stamp duty being abolished UK’? Sadly, this tax on property purchases is set to stay and the March Budget didn’t contain any change to the thresholds or stamp duty holidays. Stamp duty is a big earner for the Government. According to its own figures, stamp duty receipts increased from £8,670 million to £14,100 million between financial year 2020-21 and 2021-22 – income it can’t afford to lose.
With no stamp duty discounts offered, we had to sift through the rest of the Budget details to see how it may benefit home movers and property investors. The theme for the masses was how to keep more pounds in the purses and pockets of the nation.
On the surface, the planned change to childcare funding bore no relation to the property market but on closer inspection, there was a positive to be drawn. The Government will extend its 30 hours of free childcare to children as young as nine months, which should drastically cut the amount of money parents spend on nursery or childminder fees.
The financial saving were swiftly acknowledged by mortgage lenders, who usually take the amount spent on childcare when calculating borrowing prospects. The money saved may prove the difference between passing an affordability test or not, although it’s worth noting the extended free hours of childcare will be phased in from April 2024.
While not a direct saving, the Chancellor decided to extend the Energy Price Guarantee (EPG) to prevent fuel costs from rising even further after April. The £2,500 per year cap will stay until July 2023 but this doesn’t mean energy bills will always be less than this sum. Users still have to pay for all the energy they use and this may amount to more than £2,500 every year.
Finally, the Chancellor revised the rate of corporation tax and this may hurt the biggest portfolio landlords who operate as a limited company. From April 2023, the main rate of corporation tax for those making the most annual profit - £250,000 or more - will increase from 19% to 25%. The current rate of 19% will still apply if profits are £50,000 or less. A new marginal relief will apply to limited company landlords whose profits are between £50,001 and £249,999, with a tapering system in place.
It's worth noting that the Prime Minister followed the Budget with his own property announcement. Mr Sunak wants to make it easier for landlords to evict problematic tenants as part of wide-ranging reforms designed to crack down on anti-social behaviour.
Details suggest private renters whose behaviour is ‘capable’ of annoyance and disruption – a much looser definition that the previously prescribed anti-social culprits of noise, drug use and damage to property - will only need two weeks’ notice before eviction proceedings can start.
The change will apply to all new tenancies and new agreements will have to include clauses that specifically ban anti-social behaviour.
If you are a landlord with problem tenants and don’t have time to wait for an eviction process to go through the courts, you can sell your property with the renters in situ. Open Property Group specialises in purchasing buy-to-lets where the tenancy has turned sour. Contact us to discuss your specific circumstances or request a free cash offer to establish what your home could sell for.
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