The second budget of the year saw investment in housing but any changes to property taxation were largely absent.

On 27 October 2021, Rishi Sunak announced the Government's plans for the UK's spending over the next year.

With headline changes, such as the NHS funding, the lifting of the freeze on public sector pay and an increase in the National Living Wage, already leaked to the media, where there any surprise announcements that would have a significant impact on the private rented sector?

Our Mortgages Managing Director, Richard Rowntree, reviews the key takeaways

Taxation

For landlords, it was more a case of what wasn’t in the Budget as the Chancellor made no significant changes to either Capital Gains Tax (CGT) or Stamp Duty Land Tax. On the former, it has previously been mooted that landlords could face stiffer CGT requirements, but Rishi Sunak left this area of taxation alone other than to extend the period of time for residents to pay CGT after selling UK residential property from 30 days after the completion date to 60 days.

On the latter, there were no changes to Stamp Duty Land Tax after the end of the successful holiday scheme and no commitment to review the tax going forward.

Housing

Housing was on the agenda, with building more homes listed as one of the areas where taxpayers’ money would be spent to make the most difference to people’s daily lives.

Building on existing commitments that will see a £10 billion investment in housing to unlock over one million new homes, £1.8bn of new funding for housing supply was confirmed.

This will be distributed to local authorities which will be tasked with regenerating brownfield sites to deliver 160,000 homes.

Alongside this, £11.5 billion will be spent delivering up to 180,000 affordable homes, as part of the Affordable Homes Programme (2021-26).

Addressing the UK’s shortage of homes has long been on the political agenda but Government targets for building new properties have been consistently missed, so while the investment will be welcomed, it is unlikely to be seen as enough to tackle the issue.

When viewed alongside fundamental drivers of demand like a growing and ageing population and increasing number of households, this means that the place of the PRS in providing decent, affordable homes will remain.

Cladding

The Chancellor announced £5bn will be made available to remove unsafe cladding from the highest risk buildings, partly funded by the Residential Property Developers Tax. This tax, introduced in April 2022, will be charged at 4% on property develop profits exceeding an annual allowance of £25 million.

Levelling up

In line with the much mentioned ‘Levelling Up’ agenda, the Government says that 65% of the Affordable Homes Programme funding will be for homes outside London. In addition, the chancellor also allocated the first round of bids from the levelling up fund, noting it would be £1.7 billion to “invest in the infrastructure of everyday life in over 100 local areas”.

We’ve already seen an increasing amount of buy-to-let investment in the north of England, landlords modifying portfolios in response to strong demand and drawn by the ability to achieve good yields, and this latest spend could eventually improve the appeal of some areas that are currently not seen as desirable, potentially making them attractive investment opportunities.