In our blog post yesterday discussed topics that landlords should keep an eye out for in today’s Budget announcement. Housbuilding, the cost of utilities and benefits were three topics that we advised will affect landlords the most in the upcoming year, as the amount of housing in the UK and the cost of living will directly influence their business. The Budget has now been officially revealed, and as we predicted there has been some interesting plans made for the housing sector that all aim to promote growth.
In order to reduce the overall cost of living George Osborne announced that he would be scrapping the plans to increase fuel tax by 3p per litre in September, which is good news for landlords as it means that their tenants are less likely to suffer from financial difficulties and potentially fall into rent arrears. Furthermore, the government has said that they will introduce a new help-to-buy scheme that will target those struggling to find the money for mortgage deposits. The scheme plans to give anyone who provides a 5% deposit for a new home a 20% loan; however it is still not clear how many people will actually benefit from this scheme.
The good news is that from 2014 tax free earnings will increase to £10,000 a year, meaning that on average each person in the UK will take home £700 more per year. Landlords will also be glad to hear that the capital gains tax holiday will be extended so that those with large property portfolios will not see a reduction in income, which is also good news for other companies that rely on the private rental industry such as landlord insurance providers.
Discussing the Budget, Matthew Sinclair, chief executive of the TaxPayers’ Alliance said: “George Osborne has announced welcome relief for people struggling with the high cost of living. The cut in beer tax, the freeze in fuel duty and the higher personal allowance will all ease the pressure on family budgets. Lower Employer’s National Insurance and Corporation Tax will also be passed on to workers in higher wages. Unfortunately, the great limitation of this budget was that it relied far too much on complicated targeted reliefs instead of tax cuts across the board. Simpler, strategic tax reforms that reduce the overall burden would be fairer and do more to produce the stronger economy Britain needs.”