The Chancellor, Jeremy Hunt, has presented his Spring Budget 2023. The budget includes a number of measures that will affect tenant affordability, agent businesses, and landlord costs and as such could have an impact on many of our readers’ property and lettings businesses. We have briefly summarized the main points here, or for the full article you can go directly to the government’s announcement Spring Budget 2023:
- Corporation Tax: Corporation tax will rise in April as planned, from 19% to 25%, for businesses that make a profit of more than £250,000.
- Fuel Duty Freeze: The fuel duty freeze will remain in place.
- Pension Allowances: The amount that workers can add each year to their pension allowance before paying any extra tax will be increased, from £40,000 to £60,000. The lifetime allowance will be abolished.
- Energy Price Cap: The current energy price guarantee will continue for an extra three months, expected to end in June 2023.
- Childcare: New measures for parents on universal credit, the government will cover childcare costs up to a max of £951 for one child and £1,630 for two. Additional childcare support measures were also announced.
- Little Support For the PRS: Aside from the corporation tax relief change, affecting some landlords with large portfolios operating as a company, there was little mentioned that would help encourage landlords to remain in the sector.
- Devolution of Power to LAs: Greater Manchester and West Midlands Combined Authorities will be given more powers to “set the strategic direction over the Affordable Housing Programme in their areas.”
- UK to Avoid Recession: Despite the cost-of-living crisis, the UK is likely to avoid entering into recession, as prospects for the economy have improved from earlier predictions.
- House Price Predictions: The current situation must also take into account mortgage interest rates. House prices rose in February, as mortgage interest rates dropped, injecting some confidence into the market. However, the Office for Budget Responsibility predicts a 10% drop in house prices, driven by high mortgage rates.
There is some general good news for the economy here and potentially the property industry as a whole, but as expected, very little support or stimulation of the rental sector specifically. We will still need to keep an eye on these trends to understand their impact on the PRS.
