The UK's chancellor, Jeremy Hunt, recently delivered his Autumn Statement on November 22nd 2023, setting out various changes for 2024 and beyond which will have a significant impact on households around the country. As part of this statement, several changes were raised which will have a significant impact on landlords in Northampton and Rugby, but don't worry - a lot of this is good news!
In this article, we'll look at the key highlights of the Autumn Statement landlords need to be aware of and how they are set to impact not just UK landlords, but their tenants too.
National Insurance Changes
The first change announced in Jeremy Hunt's Autumn Statement was the announcement of National Insurance changes for full-time landlords. To many landlords' surprise, Hunt explained in the statement that from April 2024, self-employed landlords who make more than £6,275 annually from their property will no longer have to pay Class 2 National Insurance contributions.
UK landlords typically pay a compulsory charge of £3.45 every week toward National Insurance, so you'll be happy to know that this will no longer be necessary from April. Whilst it's not an enormous weekly saving, every little helps, and this will save you a solid £192 every year!
Housebuilding Pledges
Throughout the last year, it has become clear that the demand for rental properties has far exceeded supply, and this led to Hunt pledging new housebuilding initiatives for 2024. Various measures to change this were announced, but most notably, he pledged over £100 million to build 40,000 homes.
Furthermore, an additional £32 million was also pledged to help develop new areas of accommodation in London, Leeds, and Cambridge. Overall, the reception to these announcements has been positive, and it is only expected to improve the rental market for UK landlords in 2024.
House to Flat Conversions
During the Autumn Statement, Jeremy Hunt raised another interesting point which pricked up the ears of many landlords - potential changes to Permitted Development Rights (PDR). PDR is a strict set of rules that determines the rights of UK landlords to develop their property, but thankfully, Hunt's proposed rule changes will only affect you positively.
In the proposed changes, it was suggested that landlords will soon have the opportunity to convert houses into two flats, providing that this does not involve the changing of architecture or external appearance. Previously, this would have been impossible, and if this change came to fruition, it could facilitate a seriously lucrative opportunity for you to squeeze more accommodation listings and revenue out of your property!
Additional Tenant Support
Next, Hunt explained in his statement that 2024 would see a boost in the Local Housing Allowance (LHA), offering struggling households an average of £800 in additional support throughout the year. This is because LHA is supposed to cover the lowest 30% of rents across the country, and rents have been increasing significantly UK-wide.
This change should see benefits for both tenants and landlords. Whilst £800 may not sound like much, it is expected to give tenants some much-needed relief throughout the year, helping them to stretch their LHA further. It will also help you as a landlord, helping to make your properties more affordable for those taking advantage of the benefit.
Tax-Free Allowance Cuts
Unfortunately, not everything announced in the Autumn statement was good news for landlords. Last year in the Autumn Statement 2022, the UK chancellor suggested the potential for significant cuts to the tax-free capital gains allowance of UK landlords, a notion which was kicked off by a cut from £12,300 to £6000. To the dismay of landlords around the country, it appears that the chancellor was serious, as further cuts in 2024 have been confirmed.
Unfortunately, the threshold of tax-free allowance from capital gains will now be reduced by 50% once again, leaving it at just £3,000 by the time April 2024 rolls around. Unfortunately, whether you're renting property or selling it, this means that you should expect a higher tax bill next year.
Changes We Didn't See
Whilst many changes were laid out in the Autumn statement, there were still several issues that many landlords expected to be mentioned, yet they were not. One such example concerned changes to energy efficiency standards, something that was expected after Rishi Sunak scrapped the previous set last year. However, the statement was greatly dominated by discussion of the previously mentioned new housebuilding measures, and no mention of new energy efficiency standards was announced.
There was also no mention of stamp duty changes, despite many people expecting the announcement of an increased threshold to make life easier for first-time buyers. Ultimately, this means that property buyers will continue to pay no tax on the first £250,000 of their first purchase, whilst the usual 3% will still be expected from more established landlords.
Last but not least, many Autumn Statement spectators were surprised to see a lack of mention of the Renters' Reform Bill. During King Charles' recent speech, he laid out a focus on this bill for 2024, which will make it harder for landlords to evict tenants, introduce more lenient rules surrounding pets, and introduce a 'Decent Homes Standard'. However, this wasn't discussed at all in the Autumn Statement, leading many to anticipate that such changes won't be seen for at least another year.
Conclusion: Adapting to Change
Big announcements such as the Autumn Statement often put fear in the eyes of UK landlords, but thankfully, things were fairly positive this year. Whilst many are frustrated by the reduction of tax-free capital gain allowances, there's no denying that the national insurance changes, housebuilding pledges, further tenant support, and suggested changes to the PDR are all positive for the market as a whole.
All changes proposed in the statement are due to be put into effect in April 2024, so start planning now, as you may need to adapt your strategy as a landlord. Don't forget to keep an eye out for other changes too, because, as was mentioned, many expected announcements were not made, so these could potentially be laid out in the early months of 2024.
What Next?
Horts are lettings and property management specialists in Northampton and Rugby. We always keep up with the latest legislation and changes in property rental so that landlords are informed.
Reach out to our team with your questions - we are always here to help.
Call us at our Northampton office on 01604 639933 or email us at northampton@horts.co.uk
Call us at our Rugby office on 01788 550044 or email us at lettings@horts.co.uk
