The Chancellor’s Spring Statement delivered precisely two years after the first Covid lockdown, made its primary focus the need to address worries about the rising costs of living.
However, elements in the statement are relevant to the property market, including cuts in VAT for green energy materials and a decision not to increase stamp duty surcharges on second home purchases.
Quealy & Co Estate Agents in Sittingbourne, Kent like to ensure their customers received the very latest property market news. So, precisely what effect will the changes have on UK property owners?
Cuts In Energy-Saving Purchases For Homeowners
Homeowners in the UK are set to benefit from slashed VAT on the purchase of energy-saving materials like insulation, heat pumps, and solar panels. Over the next 5 years, there will be 0% VAT to pay on materials designed to make homes more energy-efficient, down from 5% VAT relief.
It’s estimated that these tax savings are worth around £1000 upfront and will help reduce annual energy bills by around £300. It’s a welcome measure for homeowners and landlords alike since they can make their homes more energy-efficient and help keep the costs of heating and lighting their properties down.
No Increase In Second-Home Stamp Duty
Although there was some speculation that the stamp duty surcharge levied on second homes and buy-to-let properties in England would be increased in the Spring Statement to 4%, this did not materialise.
While it will come as a relief to property owners struggling with the cost-of-living crisis, there is no doubt going to be some disappointment that the current 3% surcharge wasn’t scrapped altogether. That will also come as bad news for renters since a recent study commissioned by the NRLA showed that removing the surcharge could lead to 900,000 more private rental properties being made available in the next ten years.
The Income Tax Basic Rate Cut And The Impact On Property Owners
For many people, the announcement that the income tax basic rate will be reduced by 2024 to 19p from 20p in the pound resulting in a £5 billion cut in taxation for 30,000,000 people sounds like a positive move. Especially when considering the rise in National Insurance thresholds to £12,570 (an increase of £3000), which will help save the UK’s working population about £6 billion per year.
However, for landlords, the news may not be enough to help deflect the rising taxes over the months to come. National Insurance is set to increase by 1.25% from April. On top of this, some landlords might find themselves affected by “stealth taxation” – falling into a higher tax band when allowances and thresholds aren’t increased.
No Change Yet On Rental Reforms
Although an announcement was made in February about rental reforms that will be introduced, including more bans and fines for rogue landlords, consultations about a national register of landlords, the introduction of minimum standards for private rental properties, and an end to Section 21 evictions, the Spring Statement contained no updates about these proposals and a possible timescale for their introduction. It’s hoped that a white paper that focuses on rental reform may be published soon.
Property owners nationwide will now be looking ahead to Autumn’s full budget in the hope of more positive announcements.
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