The Autumn Statement: What it means for landlords
This week saw a big campaign win for the NRLA on Local Housing Allowance rates in the Chancellor’s Autumn Statement. But much more is needed to address the supply crisis and appeal to landlords ahead of a general election. NRLA Deputy Policy Director Meera Chindooroy explains more.
Tax changes, and stays the same
High on Jeremy Hunt’s feel-good announcements list were cuts to National Insurance contributions (NICs). He confirmed a two per cent cut for employees. And – of interest to some landlords – if you are self-employed with profits over £12,570, you will no longer be required to pay Class 2 NICs from April 2024, and you will continue to be eligible for contributory benefits including the state pension.
We were disappointed, however, that the Chancellor did nothing to address taxation issues affecting supply in the sector. The NRLA had argued for a number of changes – including a review of changes to Mortgage Interest Relief (MIR), the additional Stamp Duty Land Tax (SDLT) levy and the introduction of pro-growth tax measures – to add additional supply into the market while boosting the Treasury’s overall tax income.
This year has seen the supply and demand imbalance spike, with Rightmove reporting on average 25 enquiries are received for each home advertised to let. Our research has shown that recent tax changes, along with mortgage interest rates and inflation, are seeing the gap continuing to widen, with latest figures showing 43% of landlords are planning to sell, with just 10% planning to buy.
As we head into a year of (unofficial) general election campaigning, we will continue to make the case for measures to help stimulate supply by providing landlords with the confidence to invest.
Planning, housebuilding, and house buying
The Government might not have changed the tax regime, but they have tried to put a focus on housebuilding. Successive UK Governments have failed to hit their housebuilding targets. The Conservative 2019 manifesto commitment of 300,000 new homes per year by mid-decade remains and the announcements this week appear aimed to move closer to this.
The Government have said they’re investing an extra £32 million to ‘unlock thousands of homes across the country’.
Of most interest to members may be plans to change permitted development rights to allow houses to be subdivided into two flats without changing the façade. The Government will consult on this in early 2024 and has committed to implementing the change next year.
Other measures include the removal of planning red tape to improve speed of decisions and funding to tackle the planning backlog and deliver housing quarters in Cambridge, London and Leeds. They also announced an extra £3 billion for the Affordable Homes Guarantee Scheme, leading to 20,000 new homes and improving the quality and efficiency of others.
The Government have also said they will improve the home buying and selling process, promising a range of (mostly unspecified) measures, including pilots to digitise local council property data.
Welfare reforms
The realignment of the Local Housing Allowance with the 30th percentile of market rents is welcome following the freeze since 2020. But it will only be a sticking plaster, committed to as a one-off, and only coming in from April 2024.
Universal Credit will be uprated by 6.7 per cent, in line with inflation to September 2023, from April 2024. The National Living Wage is also being increased to £11.44 per hour.
With the both the cost of living and the supply crisis having an impact on tenants’ abilities to secure homes in the sector, it’s vital that the connection between Local Housing Allowance and market rents is reestablished in the long term. This will become even more important as the changes proposed in the Renters (Reform) Bill become reality and landlords seek confidence that tenants will be able to afford to keep up with rent payments.
