The government’s long-anticipated Autumn Budget landed with little relief for the property sector, offering no significant support for buyers, landlords or developers.
Industry figures had hoped for measures to stimulate growth or alleviate pressures in the private rented sector but the package delivered falls short of expectations.
The Budget confirmed a series of tax rises that will hit property investors and small businesses, while offering no reforms to stamp duty or incentives for first-time buyers.
Analysts say the measures risk further dampening market activity at a time when transactions and sentiment are already subdued following months of speculation about potential tax changes.
MANSION TAX
A new “mansion tax” on high-value homes will affect only the top end of the market and is expected to raise relatively modest revenue. Meanwhile, tighter limits on savings allowances – including a cut in the annual cash ISA limit for under-65s from £20,000 to £12,000 – may make it harder for aspiring homeowners to build deposits.
Landlords will also face a tougher fiscal environment. Although the Budget removes the threat of punitive National Insurance charges, property income tax will rise by 2%, a change likely to feed through into higher rents.
Dividend tax will also increase by 2%, creating additional financial pressure for landlords who own properties through limited companies.
TENANT IMPACT
Steve Moss (main picture), Chief Executive and Founder of the property investment firm Sourced, warned that the combined impact of the measures would be felt most acutely by tenants.
He described the tax increases as a “double whammy” for incorporated landlords and said the changes would force many to review their portfolios.
HIGHER TAXES
He added that self-employed estate agents and small firms would also be hit by higher taxes on savings, property and dividend income.
Moss said the absence of any action on stamp duty and the lack of support for first-time buyers amounted to “missed opportunities” for a government that has pledged to boost home ownership.
Moss argued that, in the face of rising costs and an increasingly complex tax landscape, landlords will need to professionalise their operations.
He also highlighted Sourced’s newly launched subscription service, Sourced Enterprise, as an example of tools designed to help investors navigate a more demanding environment.
