What’s in the Budget?

What’s in the Budget?

The Chancellor surprised everyone by announcing that the Budget would take place on Monday, 29 October, much earlier than expected since Brexit negotiations conclude at the end of November.

While the Conservative Party conference earlier this month revealed only a handful of major policy announcements, the Budget is likely to look to strengthen the UK’s economic position post-Brexit.

In the Budget recommendations we submitted to the Treasury we called for the immediate review of the removal of finance cost relief for landlords, Capital Gains Tax (CGT) reduction measures, the reintroduction of the Landlords’ Energy Saving Allowance (LESA), and the abolition of the Stamp Duty Land Tax (SDLT) levy on additional property. You can read our full submission here.

A tax break?

The media has been feverishly speculating about the potential for a capital gains tax break. The Times reported that senior Conservatives were keen on the proposal by the centre-right think tank Onward for landlords to receive 100 per cent CGT relief if the property is sold to tenants who have lived there for three years or more. Onward proposes that the gain from the tax relief is split evenly between the landlord and the tenant, supporting tenants to provide a mortgage deposit while also benefiting landlords. The think tank says the Treasury can fund this through changes to other tax reliefs for buy-to-let investors, such as the Private Residence Relief period and Lettings Relief.

With the recent consultation on barriers to longer tenancies, and the government’s focus on increasing home ownership, it is highly likely that some incentives will be announced to encourage landlords to offer longer tenancies as well as release properties to first-time buyers.

We have called for similar measures to encourage the sale of properties to sitting tenants for some time and will be watching closely for the detail of the initiative.

Removal of limits on council borrowing

The major housing announcement that came out of the Conservative Party conference was the scrapping of the current cap on how much councils can borrow against their existing housing stock. The government estimates this will enable councils to build up to 10,000 extra homes a year. Councils would be better able to take on smaller sites that are unattractive to private developers.

Chancellor Philip Hammond will use the Budget to outline a plan for this policy to be introduced. The government confirmed that the cap will be lifted “as soon as possible”.

Energy-efficiency incentives

We can expect some announcements to promote energy efficiency as the government seeks to meet its targets. The government’s Clean Growth Strategy aims to reach a minimum Energy Performance Certificate rating of C for as many residential properties as is practical, cost-effective and affordable by 2035 and for privately rented properties specifically by 2030.

Properties in the private rented sector in England and Wales are currently required to meet a minimum energy-efficiency level of E for new tenancies and will be required to reach that standard for all tenancies by 2020.

We are still awaiting the government’s response to their consultation earlier this year on introducing a cost cap for landlords who implement energy-efficiency measures.

Other possibilities

During the summer there was speculation about further changes to Stamp Duty, with additional increases for buy-to-let properties. There has been no more speculation on changes for UK buyers – but it remains a possibility to fund other policy commitments.

The government has already announced an additional levy on foreign buyers of properties in the UK with revenues going towards addressing homelessness. It will be consulting on the level of the levy in due course.

Members can contact our experts for free on the Advice Line if they have any queries on this or any other matter. You can upgrade to full membership here.

3 thoughts on “What’s in the Budget?

  1. Hopefully the Government will not adopt the proposed and talked about capital gains tax relief for landlords who sell to tenants, in my view I don’t think this is doing landlords any favours by promoting this kind of tinkering with the tax system which I believe is divisive to the collective strength of the landlord community.

    I would consider it an outrage and disgrace if the Government were to retrospectively remove the Private Residence Relief period and Lettings Relief, which if they adopt this measure I am sure they will do. This would be retroactive taxation used against us AGAIN and I believe that this is morally wrong.

    I am completely against this proposal and the one about tax relief for landlords who offer 3 year tenancies.
    This is not morally correct, the tax payable should be the same for all landlords and we should not be induced to sell ourselves for tax advantages to satisfy Government needs. These are divisive polices that border on discrimination, weaken the landlords position and effectively corrals them into making decisions which they have no control over.

  2. John C
    Thank you for highlighting that issue. We have been discussing this very issue as you know for months. ESP in the Times comments every time there is negative press geared towards LLs. My brother was brought to his knees and had to sell, as he was asked for tax on income he didn’t even earn. It was the most disgraceful policy, born out of greed and envy, with disastrous results for HB housing in Ireland.
    We hope gov are listening…but fear not.

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