Will changes to landlord taxation feature in the Autumn Statement?

Rob Stanton, business development director at Landbay, shares his thoughts on potential measures for landlords that could be introduced in next month's Autumn Statement.

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Rob Stanton | Landbay
26th October 2023
Rob Stanton, business development director, Landbay
"While both parties look at increasing supply to tackle the country’s deep-rooted housing crisis, neither has looked at measures to maintain – let alone increase the number of landlords."

Despite its best efforts to control the narrative, there was only two main talking points coming out of the Conservative Party conference in Manchester earlier this month; the cancellation of the northern leg of HS2 and a growing row over tax plans.

It comes as economic analysis from The Institute of Fiscal Studies revealed that Prime Minister Rishi Sunak and his predecessor Boris Johnson have overseen the largest set of tax rises since the Second World War. They predict that by the next general election, it will have risen to around 37% of national income.

With the general election on the horizon, the Chancellor Jeremy Hunt faces growing opposition from within his own party to reduce the national tax burden. The likes of former PM Liz Truss, cabinet colleague Michael Gove and short-lived housing secretary Simon Clarke have joined a number of backbench Tory MPs in calling on the chancellor to take action on taxes.

The chancellor though has remained defiant in his refusal to commit to tax cuts ahead of the next general election, saying that any such move at his upcoming Autumn Statement is “virtually impossible”. He has said he would much rather “double down” on inflation – a move seconded by the prime minister, describing any big tax cuts as “inflationary”.

It’s not just the chancellor’s colleagues calling for change. With housing a clear battleground for the two major parties, a number of professional bodies supporting the property sector have called for greater relief aimed at landlords. Propertymark is among the most high profile, urging the government to incentivise landlords to invest in the PRS by rolling back many of the hostile tax and financial changes that are having a detrimental impact.

Measures such as changes to both stamp duty and capital gains tax, as well as the removal of mortgage tax relief and the wear and tear allowance have all been amplified in the current climate, as landlords tackle higher mortgage rates and rising costs.

While both parties look at increasing supply to tackle the country’s deep-rooted housing crisis, neither has looked at measures to maintain – let alone increase the number of landlords.

The threat of landlords disposing of rental properties will clearly make matters worse, reducing options for those unable or with no intention to buy and sending rents even higher.

It’s a threat that at least one government may be set to address. Reports suggest that the Irish Department for Housing has put forward proposals to lower the rate of tax or increase exemptions for landlords, as part of its 2024 Budget. It is with the clear aim of persuading landlords to stay and “stanch the bleed” of Irish landlords leaving the market. Whether it happens is yet to be seen, especially as reports in the Irish Times suggest that a €1 billion overspend by the Department of Health may constrain spending.

Nonetheless, when you pair this with Threshold – an Irish homelessness charity, which is advocating for a sliding tax scale for landlords based on the length of tenure offered to tenants, it’s a real contrast to the UK approach to the rental sector.

Only time will tell as to whether the looming general election will be enough to encourage the chancellor to relent. Many experts suggest that Jeremy Hunt’s Spring Budget will be the most likely platform for a pre-election giveaway – if any, rather than the upcoming Autumn Statement. Even so, given the continued anti-landlord policy and wider rhetoric, it’s hard to tell how much support would actually come the way of landlords – despite the clear case.

Alongside the recent U-turn on EPC requirements, the silver lining at the moment is that there is a wealth of buy-to-lenders and brokers out there to support landlords with expansion and/or remortgage. Lenders, including Landbay, have been playing their part with regular rate reductions in recent weeks and months. Innovations such as a variable fee structure have also helped landlords maximise their borrowing potential.

In the last few weeks alone, Landbay has made a number of sizeable reductions across our two-year and five-year fixed rate product ranges, as well as our like-for-like remortgage range. This is ideal for those landlords with no changes to their borrowing requirements and is stress tested at the lower rate of pay rate plus 1%.

The ideal scenario would be proactive buy-to-let lenders and brokers, paired with a fairer tax policy that incentivises landlords to not only enter the market, but to maintain and expand their portfolios. The last thing anybody needs is landlords disposing of rental properties, least of all those who rely on the PRS for housing. Without meaningful change to tax policy, the chances of this increases greatly. We can only hope the penny drops for the chancellor and the government before it’s too late.

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