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Autumn Statement: The Lowdown for Landlords

autumn statement 2022

Now that the dust has settled on Chancellor Jeremy Hunt’s Autumn Statement, the property industry has been reflecting on what it all means. Amidst a backdrop of doom and gloom with rising interest rates, increasing landlord legislation and a very real cost of living crisis, are there any positives to hang on to? How will the Autumn Statement 2022 affect landlords and the property market?

Before we begin, one thing to keep in mind is that property has always been a very stable and secure long-term investment. While the outlook for the next 18 months or so looks set to be challenging, there are always positives to draw on and money to be made. The property market may emerge from it stronger than ever.

Reduction in the Capital Gains Tax Threshold

One of the key announcements in the Autumn Budget was the cut to the capital gains tax threshold. In April 2023, the tax-free allowance will reduce from £12,300 to £6,000, before being halved again in April 2024. This means landlords selling a buy-to-let property will pay significantly more tax on any profit they make. 

Considering the current situation faced by private landlords with rising mortgage payments, increasing maintenance costs and tougher legislative reforms slanted in the favour of tenants, it would be little surprise to see landlords rushing to sell up before the threshold starts to fall next year.

Stamp Duty Cut to End in 2025

It was also announced that the stamp duty cut announced in September will come to an end on 31st March 2025, meaning buyers can continue to enjoy a stamp duty exemption on properties up to £250,000 for more than two years, although landlords will still need to factor in the three per cent stamp duty surcharge. After this date, the threshold will return to £125,000.

Freezes to Tax Thresholds

Many people have accused the government of ‘stealth taxes.’ While headline tax rates have not changed, the freezing of tax thresholds means many people will pay significantly more in tax as earnings and property prices rise.

  • The income tax threshold will remain at £12,570 until April 2028
  • National insurance and inheritance tax thresholds also frozen until April 2028

Other Key Announcements

  • Corporation Tax to be set at 25% from April 2023 for companies with profits of more than £250,000,
  • The personal tax additional rate threshold will be reduced from £150,000 to £125,140 from April 2023
  • VAT registration threshold to remain at £85,000 for two years from April 2024
  • Energy Price Guarantee cap for an average household to be raised from £2,500 to £3,000 in April 2023
  • Inheritance tax nil-rate bands to stay fixed until April 2028
  • Annual Investment Allowance to rise to £1 million from 1 April 2023 – its highest ever permanent level

Looking Ahead to 2023

So, with the year drawing to a close and the Autumn Statement done and dusted, now is a natural time for landlords and property investors to start looking ahead to 2023. 

Next year, keep an eye out for more announcements on the government’s rental reforms, including the outlawing of Section 21 evictions, as well as further details on changes to the minimum Energy Performance Certificate rating for rental properties.

One of the biggest challenges likely to face landlords in the year ahead is rising interest rates, with further increases likely to eat into landlords’ already diminishing returns. As mentioned, corporation tax is also set to rise next April, meaning higher taxes for limited company landlords.

So, is it all doom and gloom?

While there’s no denying that the economic situation is somewhat bleak, there are always opportunities within the property market – it’s just that the landscape has changed somewhat. For example, property portfolios offer a way to profit from property without the worries of rising mortgage rates or increasing maintenance costs. In addition, the years ahead could represent an opportunity to buy property at a reduced rate.

What’s more, it’s important to remember that property has traditionally represented a stable long-term investment option. There are still likely to be many opportunities for income generation and long-term gains.

For more information about property investment in the current climate and the different options that may be available to you, please don’t hesitate to give us a call on +44 (0)1708 922 222 – or fill in our contact form to request a callback.

Important note: The information provided in this article is general in nature and does not constitute personal financial advice. If you are unsure whether an investment is right for you, please seek professional advice. If you choose to invest, the value of your investment can both rise and fall so you may get back less than you put in.