The government’s Autumn Statement is one of the most important financial announcements of the year. It sets the direction for the upcoming year and provides insights into what can be expected in 2024.
Although there weren’t any significant announcements related to the rental sector in this year’s Autumn Statement, Chancellor Jeremy Hunt made some noteworthy announcements that will impact landlords, either directly or indirectly.
To help you navigate all the information that was released in the Autumn Statement, we’ve put together a list of the four primary announcements that could affect landlords. These include changes for tenants, taxation, and the wider housing market.
Increase in Local Housing Allowance for tenants
Tenants on lower incomes will receive additional assistance to cover rental housing costs through an increase in the Local Housing Allowance (LHA). LHA rates, which determine Housing Benefit entitlement for tenants in the private sector, will be raised to cover at least 30% of local market rents. On average, this amounts to £800 of support, although actual amounts may differ depending on factors such as property size and location.
Boosting new home building efforts
The Chancellor has pledged to invest in the construction of new homes by allocating £110 million to nutrient mitigation schemes. Through these schemes, developers can purchase credits to offset nutrient pollution caused by housing development. Additional funding will also be provided to local authorities to facilitate the construction of new homes and tackle planning backlogs in Leeds, London, and Cambridge.
By increasing the availability of homes, it is hoped that these measures will alleviate pressure on the rental market by encouraging more renters to transition into homeownership.
Tax cuts for self-employed landlords
Although not directly linked to housing, the tax cut announcements for the self-employed should have a favourable impact on many professional landlords. According to the 2021 English private landlord survey, approximately 13% of landlords are self-employed as a landlord, with that number going to 39% among landlords who own five or more properties.
As per the Chancellor's statements, Class 2 National Insurance will be abolished, and Class 4 National Insurance will be reduced from 9% to 8% of overall earnings. The overall effect of these changes could lead to annual savings of up to £250 for self-employed landlords.
Converting your home into two flats to be made easier
Property developers can anticipate a consultation on a new Permitted Development Right. This proposed change aims to simplify the conversion of homes into two flats, providing you do so ‘without changing the facade’. Together with the funding allocated to address backlog issues with Local Planning Authorities, this measure could enable landlords to potentially double their income by developing their properties and accommodating a greater number of tenants.
The information contained within was correct at the time of publication but is subject to change.