Budget 2021 – What It Means For UK Property Investors

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Chancellor Rishi Sunak announces his 2021 Budget. This is a budget aimed at recovery and rebuilding the economy as we come out of the Covid-19 crisis.

In this video below, I look specifically at what this budget means for property investors.

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BUDGET: Chancellor drops feared CGT hike but raises taxes for Ltd landlords in 2023

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The Chancellor went fairly easy on landlords in today’s budget, announcing an extended stamp duty holiday, but no immediate change to Corporation Tax or Capital Gains Tax.

To ease the stampede to complete purchases before the current stamp duty holiday comes to an end, as expected, Rishi Sunak announced that the £500,000 nil rate band would now end on 30^th June instead of the end of March.

To smooth the transition back to normal, the nil rate will be £250,000 until the end of September and will only return to the normal rate from October.

Corporation Tax will increase to 25% – higher than the expected 24% – although not until April 2023, while small businesses with profits of less than £50,000 will remain at the current rate of 19%.

No CGT change

Sunak didn’t change Capital Gains Tax (CGT) rates, as many had feared. Instead he promised to maintain the current level until April 2026; it will remain at £12,300 for individuals, personal representatives and some types of trusts and £6,150 for most trusts.

For those with commercial tenants, he announced a new restart grant for retailers due to open in April, who will then be eligible for grants of up to £6,000 per premises.

Those that have to wait longer to open, such as gyms and pubs, can get grants of up to £18,000. Eligible retail, hospitality and leisure businesses also won’t pay business rates for three months, with up to 66% relief for the rest of the year.

Universal Credit

Sunak also extended the Universal Credit uplift of £20 a week for another six months,as well as extending the furlough scheme to the end of September. “We’re going long,” he said, “and extending our support well beyond the end of the roadmap.”

However, Ryan Jones, business rates partner at Cluttons, says business rate reliefs granted during the last 12 months almost exclusively afford relief to occupiers and that those who have been forced to close have been worst affected during the pandemic.

He adds: “For owners and leaseholders of vacant commercial property there has been little support and their rate liability is still payable and there is not expectation that this will change.” 

Industry reaction

Ben Beadle (pictured), chief executive of the National Residential Landlords Association, also wasn’t impressed at the lack of support for tenants and landlords in the budget.

He says: “He has failed to provide the sector with the financial support needed to pay off rent debts built as a consequence of the virus.

“Without help to get arrears cleared, many tenants face the prospect of losing their homes and having damaged credit scores, which will undermine the government’s efforts to help generation rent become generation buy.”

Timothy Douglas, Policy & Campaigns Manager for Propertymark (pictured), says: “Extending the increase to the Universal Credit Standard Allowance and the furlough scheme until September will help tenants plan ahead but much more is required to avoid a mounting crisis in the private rented sector.

“As the impact of Covid continues to bite and unemployment rates rise, we are increasingly concerned about how tenants will avoid future rent arrears and landlords will remain incentivised to stay in the rental market. There is a real need for the UK Government to ensure a wider package of measures to help tenants and landlords keep the rent flowing.”

Isobel Thomson, Safeagent Chief Executive (left), says: “It has been an incredibly tough 12 months for many in the private rented sector, and while it is positive to see additional support such as the extension of  furlough and the Universal Credit uplift, this Budget leaves a gaping hole in financial support for the PRS.

“We first raised the proposal of grants for landlords in August 2020 – in line with grants for other self-employed people. It is a real concern that this Budget failed to offer any support for private landlords who are crucial to providing homes in the PRS.

“Over the last year they have been asked to shoulder an unsustainable burden of risk without Government help and today’s announcement offered no change to this. The Government’s commitment to turn Generation Rent into Generation Buy is laudable in the longer term but what happens in the meantime?”.

Harry Downes, MD of BTR operator Fizzy Living, adds: “Today’s mortgage guarantee and stamp duty extension shows that the government is still focused on home buyers rather than making the rental experience better. Housebuilding has flourished since measures such as Help to Buy were introduced with buyers given increasing incentive and support.

Read Sunak’s budget details in full.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – BUDGET: Chancellor drops feared CGT hike but raises taxes for Ltd landlords in 2023 | LandlordZONE.

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Pledge to do whatever it takes hollow for landlords and tenants

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Responding to the Budget, Ben Beadle, Chief Executive of the National Residential Landlords Association, said:

“The Chancellor’s pledge to do whatever it takes to support those affected by the pandemic will ring hollow for thousands of tenants and landlords across the country.

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EXCLUSIVE: ‘Kick in the teeth’ for landlords as No.10 stalls on waiving eviction renewal fees

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Bailiff evictions are facing delays and extra expense as thousands of already sanctioned warrants tick over the 12 months mark following the multiple ‘ban extensions’ announced by the government since the pandemic started.

This is because bailiff warrants granted to evict tenants a year ago will now have to be reissued.

This will require bailiffs to fill in the paperwork again (an N325 Warrant Possession Request form and an EX97A Bailiff Risk Assessment form) and also pay a fee of £121, adding more time and expense to rentals arrears and other types of eviction exempted from the ban.

One message to a bailiff from the Department of Justice recently suggests civil servants are aware of the frustrations this additional red tape will cause.

“As the expiry of the warrants is not the fault of yourselves, we are producing a submission to ministers to ask that they use the Lord Chancellors exceptional powers to exempt the fee and it may be possible to get a refund depending on the answer from number 10,” it says.

“We are very sorry for the inconvenience this will cause.”

So far, LandlordZONE is not aware of any decision being made by the Cabinet Office at Downing Street.

Tim Frome (pictured), legal director at eviction specialist Landlord Action, says: “For landlords who expected to gain possession of their property over a year ago it is another kick in the teeth to be told they have to pay a further court fee to re-engage the bailiff.

“We are having to break the bad news to landlords on cases where the bailiff warrant is over 12 months old.

“An application can be made to extend a soon to expire warrant but that requires time to draft and also incurs court fees so the landlord is no better off.

“This is another example of unintended consequences of the current court processes impacting landlords.”

This problem does not affect evictions that have been passed on to High Court enforcement companies like those featured in Channel 5 programme Can’t Pay? We’ll Take It Away! (pictured).

More information from Landlord Action.

Picture credit: DBLG Ltd/Channel 5

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HMO – single private dwellinghouse covenant refusal?

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I’m selling a house set up as an HMO, that hasn’t been rented out to anyone. It has a ‘single private dwelling house’ restrictive covenant. We are/were ready to exchange & complete.

The buyer has had the HMO licence guaranteed by the council 14 days post-completion

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SPOTLIGHT: Church of England gives its blessing to tougher landlord regulation

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The Church of England has said that parish churches should get more involved in local housing issues across England and has given landlord licensing its blessing.

Its Commission on Housing, Church and Community argues that as a significant landowner, it has to lead by example, particularly after listening to parish clergy who are reporting that pastoral problems are often linked to housing.

It highlights one Ealing parish that’s leading the way by backing the local council’s efforts to introduce selective licensing in the borough.

St Barnabas’s and Christ the Saviour churches started a campaign about affordable housing and lobbied candidates at the local elections, with a demand that Ealing should extend selective landlord licensing across the whole borough.

All of them agreed to back the idea, although the council has yet to implement this.

The Church of England is also on a mission to bring private landlords to task as part of its proposals to address the housing crisis, and recently created a ‘rental market bishop’.

Its new Coming Home report calls on the government to provide greater protection for private sector tenants through longer-term security of tenure and by placing a duty of care on all landlords.

Thorough review

It wants a thorough review of tenancy agreements in the private rented sector and for the removal of Section 21 evictions.

The report says: “We urge the government to deliver on its manifesto commitment and to ensure predictable rents and long-term security of tenure, with a clear, limited set of exceptions.”

It adds: “Landlords, particularly in the social rented sector, should ensure that the voices of tenants are heard, considered and acted on in designing services for tenants.”

The commission also urges ministers to review the social security system and its failure to provide adequate housing support for low-income household. It recommends the restoration of Local Housing Allowances to median rents in each local area.

Read more about the report.

PIC credit: www.churchofengland.org

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Cladding service launches to help landlords win Building Safety Fund applications

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A cladding remediation service has been set up to help leaseholders and landlords struggling to navigate the Building Safety Fund application process.

Cladding Consulting promises to be hands-on during the entire funding journey, through to completion of the cladding remediation work.

It will arrange a survey, organise an EWS1 review by a chartered fire engineer, submit the application and manage the process until funds are granted, remaining involved until the project’s completion.

The government set up the £4.5m fund to pay for the removal of non-ACM cladding from high-rise buildings, 18m or above.

Latest figures show that there are 1,014 applicants who have registered interest but have not progressed their claim.

Process maze

MD Steven Truman (pictured) says it’s very easy to get lost in the process maze. “We immediately recognised the huge challenges leaseholders and managers were going to face trying to complete BSF applications, which are extremely complicated and time consuming, while juggling their everyday duties,” he explains.

“With many leaseholders already at the end of their tether, worried that they could be financially ruined by the cladding fiasco, the added stress of applying for funds is the last thing they need.”

The new cladding remediation service is for those who have already started the application process, but need help to complete it, as well as those who have registered interest in accessing the fund before the 31st July deadline.

Fees

Cladding Consulting charges an initial flat fee payable after the application has been accepted while a second fee – a percentage of the net construction cost – is due once funding is received; this is only payable if remediation is successful and then only the fee included in the remediation package is payable.

All fees are charged to the building, not to individual leaseholders. 

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Cladding service launches to help landlords win Building Safety Fund applications | LandlordZONE.

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BREAKING: House prices surge unexpectedly to record high

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House prices surged by 0.7% in February, taking economists by surprise and reversing the 0.2% decline recorded the previous month.

The Nationwide’s house price index shows the annual rate of house price growth rebounded to 6.9% from 6.4% in January, raising the average price to £231,061 – the highest on record.

Robert Gardner, Nationwide’s chief economist (pictured, below), admits the increase was unexpected.

“It seemed more likely that annual price growth would soften further ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase,” he says.

The lender had expected activity and price growth to weaken, given that the purchase process typically takes several months.

Tax holiday

But it believes the tax holiday could still provide some momentum, particularly as there’s currently fewer properties on the market. Shifts in housing preferences could also boost demand, despite the uncertain economic outlook, says Gardner.

“Many peoples’ housing needs have changed as a direct result of the pandemic, with many opting to move to less densely populated locations or property types, despite the sharp economic slowdown and the uncertain outlook.”

He adds: “As a result, the outlook for the housing market is unusually uncertain. There is scope for shifting housing preferences to continue to boost activity, especially if there is further policy support in the budget.

“Nevertheless, if labour market conditions weaken as most analysts expect, it is likely that the housing market will slow in the months ahead.”

Chancellor Rishi Sunak is widely expected to extend the stamp duty holiday to the end of June in tomorrow’s announcement.

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Update on Pilar – Squatting and private property rights undermined in Spain

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Some of you may remember the letter I published, written by Spanish property-owner, Pilar Damian, who had her home squatted. Well, I can now update you on what happened next.

Pilar used eviction specialists, led by Dani Esteve and got possession of her property about a month ago.

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Council takes responsibility? Guess again!

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In January 2021, Reigate and Banstead Council declared a property to be a House in Multiple Occupation and served a Section 255 Notice under The Housing Act 2004, against one property. The Council correctly advised the Landlord that any appeal against the HMO Declaration must be made through an application to the First-tier Tribunal and not directly to the Council.

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