Chancellor of the Exchequer Rishi Sunak’s spring statement, delivered to the House of Commons last week, was one of the most eagerly awaited financial announcements of the last few years as it was made against a backdrop of rising fuel and energy prices. Here Maunder Taylor, independent estate agents based in Whetstone, take a look at the ramifications for the property market and for landlords and tenants.
A Green Incentive
The Chancellor announced a cut in VAT for homeowners buying energy-saving materials such as solar panels, heat pumps, and insulation – which means it could be an advantage for landlords prepared to make the investment now and for tenants who will be facing lower energy bills in the future.
Over the next five years, homeowners will pay zero per cent VAT on materials for improving the energy efficiency of their properties – down from five per cent VAT relief. The tax savings are estimated to be worth £1,000 up front and contribute to an annual energy bill saving of £300.
And from 2025, the minimum energy efficiency standard for rental properties is set to be increased to C for new tenancies. It will then be extended to existing tenancies from 2028.
No News is Good News for Landlords
Generally speaking, the reaction within the property industry is ‘no news is good news’ – at least for landlords. The lack of focus on the property market means that nothing was announced relating to a potential increase in the stamp duty surcharge on additional homes.
Speculation had been rife that the surcharge was to rise from three to four per cent; however, the Chancellor made no mention of any raises. Property market analysts now expect that more details may be announced in Mr Sunak’s full Autumn Budget which is due to take place in October or November.
There were also no more details about the Government’s so-called ‘levelling up’ agenda, which could mean more fines and bans for rogue landlords, a consultation on a national landlords’ register and a minimum standard for all private rental properties. This is expected to be dealt with in a Government White Paper at some point this spring.
Help for Households
The key announcements in the Statement were more focused on household budgets –affecting landlords and tenants – rather than purely on housing. The Chancellor announced a 5p per litre cut in fuel duty until March 2023, while the income threshold for at which point people start paying National Insurance (NI) will rise to £12,570 in July. However, for higher earners, the 1.25 percentage point rise in NI will remain as part of the Government’s health and social care levy.
Mr Sunak also promised to cut the basic rate of income tax by 1p in the pound – from 20p to 19p – before the end of this Parliament.
Housing Demand to Remain High – For Now
The stamp duty holiday which the Chancellor announced in 2020 has now come to an end; however, the market remains very much one for sellers rather than buyers. Fewer homes have been built across the UK as lockdown and a shortage of materials and labour have made it more difficult for developers to build new homes.
While supply has remained low, demand is still high; many first-time buyers have been looking to move house sooner to take advantage of low mortgage rates and schemes such as the Government’s Help to Buy initiative which will close in 2023.
However, it remains to be seen how much of a window of opportunity there is for would-be buyers to take advantage of low interest rates. The rate of inflation is currently at over 6% and analysts are predicting that this will rise to over 7% by the end of the year. This type of rise usually feeds through into mortgage rates.
If you are looking to buy or sell a home in Totteridge, Potters Bar and the surrounding area, then Maunder Taylor, who are independent estate agents based in Totteridge, can offer a comprehensive service.
We also specialise in commercial lets in North London and Hertfordshire; our database means we can find the right premises for you, whether you want to invest directly or would prefer to be a shared investor.
If you would like to know more about any of our services, follow this link; you can also call our Whetstone office on 020 8446 0011 or our Potters Bar office 01707 665 666 for residential management queries.