On 3rd of March the Chancellor of the Exchequer, Rishi Sunak released his 2021 budget which will heavily change the direction of the housing market in England.
The stamp duty holiday was one of the biggest talking points as it will be extended once more with some changes. The conditions that began back in July 2020 will remain with property purchase tax suspended on the first £500,000 of sales until the end of June 2021 when the nil rate band will be adjusted to £250,000 and will last until the end of September 2021.
Zoopla has already reported around 740,000 people who have utilised the tax suspension to the tune of nearly £5 billion in tax, and if Covid restrictions allow the property market will be heavily stimulated during the busy summer driving the number to over 1 billion people using the suspension period by September.
Of course we are focusing on the positives, but many challenges still face home owners / landlords. As we have previously covered, the government is making being a private landlord very challenging with forever changing legislation including the future removal of ‘Section 21’ without a clear plan of what will fill the void beyond a more dynamic Section 8.
Another concern for the future are those landlords who have used the stamp duty holiday to move properties from private ownership to limited company assets, with the announcement of corporation tax paid on company profits to increase from 19% to 25% starting in 2023.
For those running small income companies there is an upside with the 19% tax rate remaining if your profits are £50,000 or less. According to the chancellor this would mean only 30% of companies will be affected by the tax rise.
Of course the primary issue facing landlords and tenants is the ability to pay rent, which has been helped by the Furlough scheme which has already supported 11.2 million workers through the CJRS (Coronavirus Job Retention Scheme) and £33 billion has gone to the self-employed.
This scheme has now been extended until September as the government restrictions on businesses remain in place until it is safer to re-open areas of the country. But there are serious concerns about the longevity of tenants with the Director of Generation Rent; Baroness Alicia Kennedy stating:
“Two in five private renters are now relying on benefits and 715,000 households don’t get enough Universal Credit to cover their rent”
Tackling the growing debt with a tenant loan approach is only available for Wales and Scotland, the primary action the English government has taken is the implementation of a Debt Respite Scheme which only creates a pause effect only and increases the problems for both landlords and tenants.
It has never been more important to ensure your properties are filled with well managed tenants & to have expert guidance to navigate the ever changing government requirements.
Written by Toby Dawson
