Almost all the agencies that commented on yesterday’s fall statement agree – changes to capital gains tax, inheritance tax and dividend taxes will affect the rental sector private, but overall it could have been even worse.
In summary, Chancellor Jeremy Hunt has promised to maintain stamp duty reductions until the end of March 2025, after which it will increase. Capital gains tax allowances will be reduced from £12,300 to £3,000 by April 2024, while inheritance tax thresholds will be frozen.
Tom Bill, Head of UK Residential Research at Knight Frank, comments: “The reduction in the CGT exemption is an additional drag on owners but, like other announcements in the autumn declaration, it could have been worse. This will disproportionately affect owners of lower-value properties, but CGT rates have not been brought into line with income tax, so a major drop in demand or a wave of sales is unlikely. . Landlords have had to deal with a series of tax hikes in recent years, but private rental property accounts for one in five English households. At a time when the cost of living is rising so rapidly, the policy should stay anchored in the economy, encourage landlords to stay in the sector and maintain downward pressure on rents.”
Bill Harvey of the London-based specialist agency Lurot Brand says: “The increased tax burden for homeowners and changes to capital gains tax were not unexpected. However, we expect market conditions to remain the same heading into 2023, with a lack of rental supply and healthy demand from tenants looking to secure a property immediately.
And Sylvie Harris, rental director at INHOUS, says: “For the many landlords who have planned to dispose of their rental assets due to the multitude of unfavorable tax laws and changes, the announcement of the halving of the capital gains tax exemption in 2023 will be a blow. This news will make the sale less favorable for landlords and they will likely continue to rent their properties until conditions improve. However, tenants will benefit as there is already a shortage of rental properties available on the market.
Dominic Agace, Managing Director of Winkworth comments: “The move to CGT is another negative move by successive Chancellors against rental landlords, many of whom are already leaving the sector due to increased taxation, regulation and rising interest rates. This is a government objective, as the private rental sector is the only place many people can find housing if they are unable to buy. With the lack of social housing supply and the need for young professionals to be highly mobile and able to move around London and other major cities, the role of the private landlord is more important than ever and needs to be encouraged. .
Emma Hayes, Managing Director of Platinum Property Partners, sees it this way: “The cut in dividend deductions and the already confirmed U-turn in the corporate tax cut will hurt the most limited business owners, who have restructured their businesses to fight the corporate tax cut.” the mortgage interest tax relief introduced in 2017. And the capital gains tax relief cuts to £6,000 next year and £3,000 the following year could be catastrophic for cash-strapped landlords selling unprofitable rental properties. The measures could cause a mass exodus of small owners in the coming months as they try to sell before the CGT cut takes effect, which will put downward pressure on prices but upward pressure. the rise in rents as supply decreases.
Nathan Emerson, Managing Director of Propertymark, says: “Our member agents say the raised stamp duty threshold has had a positive effect on the confidence of their buyers and sellers, so we are understandably disappointed that it will be phased out by 2025. Stamp duty is not not just a barrier to entry into the property market, it prevents downsizers from freeing up much-needed family homes for second steppers. moving.