The Autumn Budget 2018 saw Chancellor Phillip Hammond restrain himself from tinkering too much with landlord tax.
Opening the Budget, Chancellor Hammond stated he believed that it would ‘open a new chapter in in our country’s economic future’.
On the back of Theresa May believing her Government have rid the country of austerity, the concerns remain regarding economic shifts following the eventual outcome of Brexit next year.
Regardless of the outcome, the budget has since shifts in the landscape for Manchester landlords and Manchester property investors, so here is our summary of what Budget 2018 means for the rental sector:
Housing and tax
- The income tax personal allowance will rise to £12,500, and the higher rate threshold to £50,000, by April 2019. From this point, they will both be indexed to inflation.
- From April 2020, letting relief on Capital Gains Tax will be limited to properties in which occupancy is shared between owner and tenant.
- The threshold for VAT registration will remain unchanged for two years.
- A further £1 billion will be made available to help the transition for those moving to Universal Credit, with the Chancellor acknowledging criticisms of the scheme. The taper rate will also be reduced, in order to make the transition smoother for claimants who are also in work.
Investment and infrastructure
- A further £500 million will be made available for the housing infrastructure fund.
- In a potential boost to landlords looking to attract tenants, the Chancellor announced a new “future High Streets fund” of £675 million to help councils transform High Streets in response to the growth of online shopping.
- The Letwin Review, on so-called ‘land banking’, will not receive a full Treasury response until 2019.
- The Office for Budget Responsibility believes that GDP growth will be 1.6 per cent in 2019, up from previous forecasts of 1.3 per cent; 1.4 per cent in 2020 (up from 1.3 per cent); 1.4 per cent in 2021 (unchanged); 1.5 per cent in 2022 (unchanged); and 1.6 per cent in 2023.
- The Chancellor predicts that real wages will continue to grow during the period, but did not give specific figures.
- The Chancellor predicts that public borrowing will be £31.8 billion in 2019/20 (down from a previously forecast £33.9 billion), falling to £19.8 billion in 2023/24.
The Autumn Budget 2018 Landlord Summary:
The most important announcements made from the Budget surrounded personal tax, including the changes to the personal allowance and higher rate income tax thresholds.
The expansion of the housing infrastructure fund may also prove important, but it remains to be seen how an increase in housebuilding will impact the PRS.
Similarly, the issue of land banking is a key sticking point in the sector and, according to some commentators, a crucial element in the so-called ‘housing crisis’, but we’ll have to wait for the Treasury’s response to the Letwin Report to understand how the government intends to address the issue.
What are the most notable changes from the 2017 Budget?
Compared with recent changes, Manchester landlords have got off lightly in the 2018 Budget. The last few years have seen a raft of tax and legislative changes that the sector have railed against, most notably the scrapping of tax relief for mortgage interest payments.
UK landlords may find themselves breathing a sigh of relief today, as restrictions on the private rented sector do not appear to have been tightened any further.
If you have any questions regarding Budget 2018 and how it may impact you as a landlord or property investor, please do feel free to give us a call on 0161 883 2525.