Budget reaction as landlords haunted by more tax hikes

The Chancellor has delivered her Autumn Budget and it is not good news for landlords, those with second-homes and first time buyers.

National Insurance contributions by employers will rise from 13.8% to 15%, with some exemptions for small businesses.

Capital gains tax increases – lower rate will rise from from 10% to 18%, and the higher rate from 20% to 24%.

Extending the inheritance tax threshold freeze and Stamp duty land surcharge for second-homes will increase by 2% to 5% from tomorrow.

No extension of the freeze in income tax and National Insurance thresholds beyond the decisions of the previous government. From 2028-29, personal tax thresholds will be uprated in line with inflation.

COO of epIMS, Craig Cooper, said, “Landlords have been haunted by a string of legislative changes in recent years, all of which have been designed to dent the profitability of their bricks and mortar portfolio, so it’s reassuring to see that second homeowners and buy-to-let investors have escaped unscathed from today’s capital gains tax hikes.”

Siân Hemming-Metcalfe Operations Director at Inventory Base, said, “While we understand the government’s aim to increase tax revenues, we welcome the move not to apply capital gains tax increases to landlords and second homeowners.

Had it done so, it would have hindered many landlords from expanding their portfolios, which would have further restricted supply across the private rental sector and accelerated the exodus of landlords, causing even more distress to tenants who are already finding it hard to find somewhere to call home.”

CEO of OpenBrix, Adam Pigott, said, “Great to see that landlords didn’t bear the brunt of the Budget tax burden today. The rental market is already in crisis due to the severe imbalance between supply and demand and further penalising landlords would have only intensified the issue further.

An increase in stamp duty on second home purchases will leave a sour taste though, as it will see an increase in costs for those looking to invest within the sector, although it’s unlikely to deter them from doing so.”

Founder and CEO of Atomic Consultancy, Lucy Noonan, said, “We waited for what could have been a chilling Halloween eve Budget from a Chancellor seemingly with her sights set on taxing aspiration.

However, whilst Capital Gains Tax has been hiked, Business Asset Disposal Relief stays at just 10% albeit rising to 14% in April. This could have been a lot worse and may enthuse potential business sellers to seek a buyer now before the rate increases.

The two other negatives for property businesses, an increase in stamp duty to 5% on second homes and an increase in the minimum wage meaning slightly higher pay costs perhaps, are surely outweighed by a property market that is about to get busier given likely further cuts in the Bank of England borrowing rate.

There’s a reason to be positive here.”

Homebuyers shown cold shoulder with no SDLT extension

CEO of Yopa, Verona Frankish, said, “With no stamp duty relief extension granted today many homebuyers will be in for a fright should they look to purchase from March of next year.

Whilst many first-time buyers will still benefit from a stamp duty free purchase should they remain within the previous £300,000 threshold, many existing homebuyers won’t be so lucky.

Those existing buyers purchasing over the value of £250,000 are set to be hit by the maximum increase in tax which will see an additional £2,500 added to the already high cost of home buying and ownership.”

Director of Benham and Reeves, Marc von Grundherr, said, “It’s a case of trick not treat for homebuyers following today’s Budget, as they’ve once again been shown the cold shoulder, with the government refusing to extend current stamp duty relief thresholds.

Whilst this won’t deter homebuyers from pursuing their aspirations of homeownership, it will add to the cost of purchasing for the vast majority, particularly those climbing further up the ladder.”

Lacklustre budget unlikely to impact property market recovery

CEO of Octane Capital, Jonathan Samuels, said, “The property market is in very good shape, driven by significant improvements across the mortgage sector in recent months. So a lacklustre Budget was always on the cards with respect to homebuyers and sales market incentives.

With Budget uncertainty now behind us, it should mitigate any temporary fears on the side of lenders and continue to drive the market forward.

Of course, it remains a delicate balancing act and we could see lender appetites soften due to today’s changes to National Insurance contributions, particularly if the result is a softer employment market.”

MD of Alexander Hall, Richard Merrett, said, “Whilst largely forecast to be a painful one, today’s Budget saw little in the way of property market penalties, with landlords and second homeowners, in particular, escaping a capital gains tax increase.

The lack of a stamp duty relief extension for homebuyers will obviously come as a disappointment, but it was largely to be expected given the fact that the property market has been going from strength to strength so far this year.

With at least one more interest rate cut expected before the year is out, the forecast remains extremely positive and it’s fair to say that no government intervention was needed to ensure its future prosperity, although today’s Budget was a somewhat missed opportunity to help stoke the fires.”

Missed opportunities to improve property selling process

Co-founder and CEO of GetAgent.co.uk, Colby Short, said, “Yet another Budget with nothing for homebuyers to write home about other than a regurgitated pledge to get Britain building.

Whether or not these housebuilding ambitions are ever realised is another matter and based on the track record of Labour’s predecessors, a fair degree of scepticism is understandably justified.

The property industry will certainly feel that today was another wasted opportunity to focus more on improving the home moving process as a whole and for the benefit of buyers and sellers.”

Gemma Young, Moverly CEO, said, “Today was a chance for the government to double down on its plans to improve the property landscape for all involved in what is one of the most expensive sales the average person is likely to be involved in.

Improvements in areas such as the provision of upfront information can help better qualify buyers, reduce the time it takes to sell and, most importantly, reduce the threat of a transaction falling through. The result being a smoother, faster, more cost-effective transaction process for buyers and sellers, which can only be a positive thing.

Unfortunately, it seems as though improving the experience of buying and selling a home wasn’t front of mind for the government today, which is disappointing to see.”

Freeze on pay rises very real possibility following NI and pension contribution hikes

Melanie Pizzey, CEO and Founder of the Global Payroll Association, said, “The government may claim to have kept its pledge not to directly increase taxes for working people, however, the decision to maintain the freeze on tax thresholds is, in effect, the same as increasing the rate of tax.

The continued fiscal drag due to these measures will pull more workers into higher tax brackets and, when combined with other existing legislation, will create severe cliffs for some working families.

What’s more, they will also be deprived of an increase in their tax free allowance, something that should be uprated in line with inflation, and this will act as a huge disincentive to take that promotion, or to put in overtime, even if it’s sorely needed.

Of course, the impact of fiscal drag could well be minimised should workers fail to see their earnings increase in the first place. This is a very real possibility given the fact that businesses have not only been hit with an increase in the National Living Wage and National Insurance employer contributions – although there will be exemptions for small businesses.”

ISA investors unscathed

Jason Ferrando, CEO of easyMoney said, “ISAs form a crucial part of the investment landscape in the UK and allow the average person to make their money work harder for them by facilitating investment into a range of accessible products.

Today’s decision to not to reduce the tax-free allowance will be welcomed by thousands of ISA investors, helping to boost their long-term financial ambitions.”