On behalf of our landlords and tenants, we would like to see what the recent Autumn Statement – also known as the Autumn Budget – might offer the private rented sector.
Would the Chancellor provide support for tenants who are currently struggling to pay their rent? Would he offer help to landlords? And finally, could anything be done to prioritise new home construction?
All these issues were addressed in the budget, and this month, our Ilford letting agents came together with our Wanstead letting agents to discuss what it all means.
Here is their list of key takeaways:
1) A rise in Local Housing Allowance
For tenants on low incomes, Local Housing Allowance can make the difference between a rent which is affordable and one that is out of their financial reach. The allowance relates to the maximum amount people living in privately rented homes can claim in Housing Benefit or Universal Credit.
The increase in Local Housing Allowance is a positive development for tenants and landlords, as the revised amount should cover around 30 per cent of local rents. In some cases, it’s estimated that renters could benefit from £450 extra per month towards their rent, making it less likely that they will default on payments.
2) Tax cuts that will benefit landlords
The 2021 English Private Landlord Survey reported that 39 per cent of landlords with larger portfolios (five properties or more) were self-employed. These landlords will benefit from the tax cuts announced in the Autumn Budget.
If you earn more than £12,570 per annum as a self-employed landlord, you could save around £192 each year, thanks to the abolition of Class 2 National Insurance. If you qualify for Class 4 National Insurance (where profits fall between the lower limit of £12,570 and the upper limit of £50,270), you can expect a one per cent reduction on the 9 per cent rate you have been paying.
Together, these measures could save self-employed landlords £350 per year.
3) Measures to increase homebuilding
The government hopes to see 40,000 new homes built as the result of a ‘nutrient mitigation scheme’ to offset the pollution caused by building construction.
£110m will be invested in this initiative, which could provide more properties to tackle the current shortage of suitable rental homes. The government has also promised to give local authorities £450 million to help them build 2,400 new homes.
4) A service to tackle planning backlogs
In order to reduce planning delays and backlogs, new ‘premium’ planning services will be introduced.
This new initiative will allow major house building developments to be fast-tracked, with planning fees refunded if agreed decision dates aren’t met.
5) Help for independent lettings agencies
Unless you have taken on landlord responsibilities yourself, it’s likely that you rely on a letting agency to take care of your rental property. Letting agencies across the country work hard to support landlords and tenants, but, like many other small businesses, they have been affected by rising costs.
That’s why most landlords may be pleased to hear that smaller, independent high street agencies (we count ourselves among that group) will enjoy some business rate relief in the coming year. In his Autumn Statement, the Chancellor promised to pause Small Business Multiplier rates for 12 months.
6) A boost for lower-paid workers
It has been estimated that over 2.7 million workers will benefit from the rise in the National Minimum Wage announced in the Autumn Statement. Many landlords have been forced to increase rents in order to meet their mortgage payments, so it’s good to see more support for those on lower pay.
The hourly rate will now rise from £10.42 to £11.44 and has been extended to include people aged 21 years and over. That’s almost a ten per cent increase for some of the country’s lowest paid workers.
7) Pensioners receive more support
Pensioners have been told that the ‘Triple Lock’ – which links pension payments to the average growth of earnings – will be retained.
That means pensions will continue to rise as UK wages increase, which is excellent news for retired people struggling to meet their rent payments.
To sum up …
Over the past two years, private renting has faced some complex challenges, so it’s encouraging to hear that action is being taken to ease the burden on renters and landlords. While landlords would probably have wished for more tax concessions, tenants on low pay will welcome planned increases in Local Housing Allowance and the Minimum Wage.
If you are a landlord searching for a letting agency to find a tenant or manage your property, why not get in touch? We combine comprehensive lettings market knowledge with fantastic customer service to ensure you get the best from your property investment.
Give us a call at 0203 972 7341 or email info@oaklandestates.co.uk.
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