Skip to content

Spring Budget 2023: No Relief for Struggling Landlords

spring budget 2023

Despite widespread calls for change, Chancellor Jeremy Hunt’s Spring Budget 2023 failed to address pressures on the Private Rented Sector – with many dubbing it a missed opportunity to tackle the housing squeeze and discourage struggling landlords from quitting the sector.

Despite no tax changes that will help landlords, there was good news on the economy, with the Government reporting that the UK has avoided entering a recession – something that may boost confidence in buyers and sellers who are still adapting to a period of high interest rates.

Easing Inflation 

The outlook for inflation is encouraging, with the Office for Budget Responsibility (OBR) forecasting it will fall to 2.9% by the end of this year – down from the 10.7% reported towards the end of 2022.

With inflation having peaked and now falling faster than previously expected, there will be less pressure on the Bank of England’s Monetary Policy Committee to increase rates again when it next meets on the 23rd March. No hike in the base rate would potentially bring some relief for mortgage holders, although industry experts are split over exactly what the Bank will announce next week.

Despite recent uncertainty, the property market has bounced back strongly since the beginning of the year, with house prices rising in February along with increased seasonal demand. With inflation falling and some stability returning to the mortgage market following last year’s Mini Budget debacle, the market has largely defied expectations – although the OBR predicts a 10% drop in prices against their peak in the fourth quarter of last year, with prices rising again by 2025.

No Direct Relief for Struggling Landlords

Disappointingly, the Chancellor failed to announce any direct assistant for struggling landlords or tenants who are grappling with rising costs. 

For buy-to-let landlords, soaring mortgage rates and increased taxation have put a massive squeeze on profits, with some forced to sell up entirely against the added pressure of increasing legislation. 

It was hoped that this Budget would bring some relief for landlords, but the sector was largely ignored, leaving many landlords to sink or swim. The much hoped for reinstatement of tax relief on mortgage interest payments failed to materialise – but there was no increase in Stamp Duty as rumoured.

Some larger landlords were dealt a blow, however, with the Chancellor confirming corporation tax will rise as expected from 19% to 25% in April on profits over £250,000.

Other announcements included:

  • An extension to the Energy Price Guarantee for a further three months, ending in June 2023
  • Twelve new investment zones eligible for £80m in funding, and £200m for local regeneration projects
  • Abolishment of the lifetime allowance – the total amount of pension savings workers can accumulate before paying extra tax
  • An increase in the annual pensions tax-free allowance from £40,000 to £60,000
  • Extension of the 5p cut in fuel duty for 12 months
  • £600m in tax relief on energy efficiency measures for businesses
  • A new type of credit for small and medium-sized businesses who spend over 40% of total expenditure on research and development, worth £27 in every £100
  • A £30m funding package for veterans
  • Fresh help with childcare for working parents who meet eligibility criteria

What Does the Spring Budget 2023 Mean for Landlords?

Considering the property market is a major contributor to overall economic health, many in the property industry will be disappointed by this week’s spring Budget 2023. For buy-to-let landlords in particular, a landscape of high mortgage repayments, increased taxation and burdensome legislation continue to put an immense squeeze on profits.

However, this doesn’t mean there aren’t lots of opportunities in the property market – especially for investors looking outside of traditional avenues. 

The avoidance of a technical recession and slowing of inflation are certainly positive, and it will be very interesting to keep a close eye on developments in the forthcoming period. As ever, investors should keep in mind that property traditionally represents a very stable long-term investment option.

For more information about the current property market, 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.