Autumn Statement 2023: What it Means for Landlords
Published on November 29, 2023 by Sarah Mac
The recent Autumn Statement, delivered on 22 November 2023, saw the Chancellor outline plans for the year ahead, with a number of measures designed to ‘help grow the economy’.
Within these measures were little more than a handful positives for landlords in the private rental sector, as well as for tenants and the property market in general. In this post we’ll take a look at the key points affecting landlords, investors and tenants.
Increase to the Local Housing Allowance threshold
The Local Housing Allowance has been extended to cover 30% of local market rents. The government predicts in the region of 1.6 million households receiving an average of £800 in support over the next year.
The allowance calculates the maximum amount that private tenants can claim in Housing Benefit or Universal Credit. The exact amount varies in accordance with location, number of bedrooms and the rent amount.
Local Housing Allowance has been frozen since 2020, even though rents have been rising considerably. The new measure aims to address the problem of affordability in the private rental sector, with rent often accounting for over 50% of living costs of private renters on the lowest incomes, and only 5% of private rented homes considered affordable under housing benefit.
National Insurance cuts
Self-employed individuals will be able to enjoy a reduction in National Insurance Contributions. Class 2 National Insurance Contributions have also been abolished for those earning over £12,570 per year, affecting in the region of two million self-employed people across the UK.
The measure will also see the abolition of the compulsory charge of £3.45 per week, resulting in savings of around £192 per year. The government also introduced a 1% cut in Class 4 National Insurance Contributions for the self-employed, reducing the rate from 9% to 8% on all earnings.
The 2021 English Private Landlord Survey estimated that 39% of landlords with five or more properties were self-employed, so this measure is set to affect the sector.
Planning system reforms
A ‘premium planning system’ is to be launched across England, featuring guaranteed accelerated decision dates for major applications, as well as fee refunds when the dates are not met. Measures to improve transparency and the reporting of planning authority records in delivering decisions in a timely fashion will also be introduced.
The government will also start a new consultation in 2024 into Permitted Development Rights, allowing any home to be converted into two flats, as long as ‘the exterior remains unaffected’.
Home building support
With demand for rental property increasing, and availability taking a dive, the commitment by the government to boost spending on new home building and to relax planning rules was welcome.
The Chancellor has committed to investing £110 million into ‘nutrient mitigation schemes’, which could see 40,000 more homes built.
There was also a pledge to allocate £450 million worth of funding to local authorities to build 2,400 new homes to house Afghan refugees, as well as a £32 million investment to resolve planning backlogs in certain areas of the country.
Stamp Duty thresholds to remain unchanged
The government has elected to maintain the current Stamp Duty rates and thresholds until March 2025. Under these rates, property buyers pay no tax on the first £250,000 of their purchase. Landlords and second home buyers will, however, still be liable for an additional 3% in Stamp Duty.
Capital Gains Tax allowance to drop further
In the 2022 Autumn Statement, a considerable cut to the Capital Gains Tax-free allowance was announced. In April 2023, the allowance dropped from £12,300 to £6,000, with another reduction on the cards for April 2024.
Despite hopes for a change, the government decided to stay with the initial plan, which means the allowance will drop again to £3,000 in April 2024.
For landlords considering selling up, this represents quite a blow to their profits.
Wage increases for tenants
The National Living Wage is set to rise by almost 10% and will now be extended to include anyone over 21 years of age, benefiting around 2.7 million workers and potentially improving tenant affordability.