26/09/2022 WORCESTERSHIRE, UK – “The impact of the government’s mini-budget may be too little too late”, that’s the warning from a law firm specialising in legal matters for landlords across England and Wales – LandlordSolicitors.com.
The warning comes as the new Chancellor of the Exchequer, Kwarsi Kwarteng, outlined a suite of tax-cutting measures including a cut to Stamp Duty. Whilst landlords will benefit from the increase to the 0-rate threshold, which has doubled from £125,000 to £250,000 there is still in place the three percentage point surcharge on additional properties.
Whilst on the upside this means an investor closing on a buy-to-let property for £250,000 has had their stamp duty reduced from £10,000 to £7,500 there are other factors that are pushing landlords out of the market.
Aled Evans, Principal Solicitor at LandlordSolicitors.com part of Ubique Legal Limited said:
“Whilst Stamp Duty cuts benefit buy-to-let landlords in certain parts of the market, the cancelling of the Corporation Tax cut will only benefit those landlords who have enough properties to make setting up a company worthwhile – and that’s a minority in the sector. Most landlords own just one property, with 85% of landlords owning fewer than 4 properties”
The bigger concern, Aled argues, is around how easy it is for landlords to deal with difficult tenants. He added:
“People come to us when they struggle to repossess their properties from difficult tenants and with the Scottish Government banning evictions over winter, and the UK government banning them during the pandemic, combined with the upcoming legislation changes to Section 21 evictions the landscape has never been trickier for landlords. They just don’t know when the next ban or edict is coming.”
Research by Propertymark in June 2022 showed a halving of the number of private rental properties on the market since 2019. Factors driving the exodus include risk, viability and finances. Aled points out that the Corporation Tax change is the only announcement that contributes to the underlying issues, adding:
“If you take away the Corporation Tax change because you don’t have a company, and you take away the Stamp Duty change because you don’t plan on buying or selling at the moment, as a landlord there is nothing for you in this mini-budget but there is added pain coming down the line with the Renters Reform Act and new energy efficiency targets.”
Despite the warnings, LandlordSolicitors.com remained optimistic about the potential for change in approach with Aled welcoming the bold and decisive approach being taken by the new government so far. He said:
“It is encouraging to see corrective actions being taken quickly, and so I hope the government will be looking to be just as decisive when it comes to protecting the private rental market because the only people who ultimately suffer the most is tenants who benefit from a stable landlord.”
Notes for Editors / Sources
- Most individual landlords (85%) owned between one and four properties, with just under half (45%) owning only one rental property. The remaining 15% of individual landlords owned five or more properties. Source: https://www.gov.uk/government/statistics/english-private-landlord-survey-2021-main-report/english-private-landlord-survey-2021-main-report–2#