One of the most significant financial announcements of the year, the government’s Autumn Statement will set the course for the rest of the year and provide insights into what to expect in 2024.
Although the housing sector wasn’t the primary focus of this year’s Autumn Statement, Chancellor Jeremy Hunt made some noteworthy announcements that will directly or indirectly impact landlords.
To help you sort through all the information released in the Autumn Statement, we’ve compiled a list of the four main announcements that could impact landlords. These encompass changes ranging from tenants to tax reforms and broader shifts within the housing market.
Increased Local Housing Allowance for tenants
Tenants on lower incomes will receive additional assistance with their rental costs through an increase in the Local Housing Allowance (LHA). LHA rates are used to determine Housing Benefit entitlement for tenants in the private renting sector. The rates are due to increase so that they now cover at least 30% of local market rents. On average, this translates to approximately £800 of support, although the specific amount may vary based on factors such as the number of bedrooms in the property and what area it is in.
Increased support for new homebuilding
The Chancellor has committed to investing £110 million in nutrient mitigation schemes to facilitate the building of new homes. New home developers can purchase credits under these schemes to offset nutrient pollution resulting from housing development. More funding will also be allocated to local authorities to construct new homes and tackle planning backlogs in Leeds, London, and Cambridge.
With more homes available, it is hoped this could reduce pressure on the rental sector by encouraging more renters to buy new homes.
Tax cuts for self-employed landlords
While not directly related to housing, the tax cuts announced for self-employed people should have a positive impact for a number of professional landlords. According to the 2021 English private landlord survey, approximately 13% of landlords are self-employed as a landlord, with that number going to 39% among landlords who own five or more properties.
The Chancellor plans to abolish Class 2 National Insurance and reduce Class 4 National Insurance from 9% to 8% on all earnings. These combined measures could potentially save self-employed landlords up to £250 a year.
Transforming a home into two flats to be made easier
Developers will benefit from a planned consultation on a new Permitted Development Right, aiming to make the conversion of homes into two flats easier, providing you do so ‘without changing the facade’. Alongside funding to address the backlog of Local Planning Authorities, this initiative offers landlords the potential to double their income by expanding their properties and accommodating more tenants.
The information contained within was correct at the time of publication but is subject to change.