The Housing rental & tenancy Budget

 

It’s that familiar time of year when the Chancellor of the Exchequer discloses the UK’s official Government Budget. That annual event where we wait for a miraculous disclosure of altruistic changes to the budget that will benefit the nation. This year billed as the “Housing budget”, has it lived up to it’s title?

We saw no amendments to Section 24 of the Finance (No.2) Act 2015 for landlords, which means the phasing out of finance costs to offset against tenant deposit claims for private landlords will carry on as planned. By 2020/21 the availability of finance costs for this purpose as indicated by Section 24 will be nil.

Interestingly we saw councils empowered with the right to charge a 100% Council tax premium on empty properties.

There was no change in the Corporation Tax structure, which will continue to see a schedule of reductions. Last year it was 20%, this year 19%, next year 18% and the year after 17%.

The announcement of £44 billion in government support including loan guarantees for House Building. A target was also announced for the construction of 300,000 new homes a year by the mid 2020s. With a particular focus on high quality buildings using high density homes in urban areas in central city areas around transport hubs.

Income Tax will be increased from Nil rate income tax bands to £11,850 and basic rate income tax bands to £46,300 from April 2018.

Indexation allowances for companies will be frozen from 2018.

The Capital Gains Tax 30-day payment window will be postponed until April 2020.

A mention by Philip Hammond to offer possible incentives for landlords to offer long term tenancies as a follow-up to the RLA’s proposal: “We will launch a consultation on barriers to longer tenancies in the private rented sector, and how we might encourage landlords to offer them to those tenants who want the extra security.”

To further encourage long term tenancies the government will be reviewing how rent-a-room relief is being used.

An additional criteria for tenant rent payment history for credit scores and mortgage applications for first-time buyers will be added. This is good news for landlords, to encourage tenants hoping to get on the housing ladder to keep their rent payments up to date.

LHA landlords will be pleased to hear of the Universal Credit changes which will see the 7 day waiting period removed with claimants being eligible for Universal Credit from the day they apply, with possible cases for hardship after a minimum period of 5 days. Housing benefit will also continue to be paid out for 2 weeks after a claim.

The VAT registration threshold will not change at £85,000 for 2 years, which is good news for smaller businesses.

A legislative review will take effect for relief on the 3% SDLT surcharge for additional residential properties. These will include:

• An individual who purchases a property from their spouse.
• An individual purchasing a property as the deputy in a child’s name or on their behalf.
• A purchaser who adds to their interest in their main residence.
• A court order issued on a divorce or dissolution of a civil partnership prevents someone from disposing of their interest in a main residence.

I saved Mr Hammond’s headliner till last, which was his abolition of Stamp Duty and Land Tax (SDLT) for first time buyers on purchases of up to £300,000 outside of London. Properties inside London will benefit from zero SDLT for the first £300,000, with the excess over £300,000 being charged at 5% up to £500,000.  Anything over £500,000 will not qualify for the exemption.