Autumn Budget: property tax increases hit landlords and homeowners
Commenting on today’s Autumn Budget announcement, Kelly Boorman, National Head of Construction at RSM UK, said: “The property industry called for a reform in SDLT to stimulate transactions in the housing market, however, this was not part of the chancellor’s Autumn Budget announcement, instead she increased taxes for landlords and high value property owners.
“The increased 2% tax charge on lower and higher rate taxable profits derived from property income will further deter property investment with landlords already seeing additional cost burdens in relation to EPC ratings and higher interest rates on buy to let mortgages. It will reduce returns yielded on property assets in the short term, and inevitably will result in higher rent for tenants. Pushing rental prices up for many tenants will further hamper their ability to get on the property ladder, leaving them with less disposal income to save for house deposits.
“The chancellor also imposed a ‘mansion tax’ on properties worth over £2m, catching what was deemed to be the wealthy, but with little consideration for retirees and the elderly occupying properties in higher value regions.
“The increased taxes on the property industry will undoubtably have an impact on house prices, reducing the level of transactions on properties over £2m, and resulting in less SDLT tax receipts, as buyers look to secure properties under thresholds, and sellers cut prices to attract buyers below the thresholds. The reduction in house prices and transactions is likely to eat heavily into the expected £400m increased taxes and may even wipe out the gain.
“On a more positive note, the chancellor continues to support investment in major transport, energy and housing infrastructure, also recognising the need for investment in technology and AI to drive efficiency. Alongside training funding for the under 25’s, this will help to stimulate apprenticeships and attract and retain staff, but this is a small contribution to meet the significant shortfall in skilled labour and an aging workforce in the construction industry.
“With more uncertainty around house prices, additional tax burdens, and little visibility on how funding for incentivising the use of technology will be addressed, it leaves the real estate and construction industry with more instability.”