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Autumn Budget 2021: Key Takeaways for Homeowners, Landlords and Tenants

October 28, 2021

The Chancellor of the Exchequer, Rishi Sunak, has now announced his Autumn 2021 Budget. The Budget includes the long-awaited announcement on Residential Property Developers Tax, as well as some key housing-related investments and reliefs.

There were no significant announcements when compared to the mid-pandemic Budget that focused more heavily on relief for the property sector - no mention of Stamp Duty holidays or eviction bans this time.

Yet, some pledges do stand to impact the property market, particularly when it comes to bolstering development and affordable housing and supporting landlords and tenants.

Here’s a run-down of all the key announcements related to the property sector.

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1. Capital Gains Tax deadline extended

Capital Gains Tax is the tax payable upon an investor's profit when they sell an investment such as property, stocks or shares, etc.

It has long been speculated that this latest budget would see the Chancellor increase the rate of Capital Gains Tax; however, this was not the case.

Instead, the budget announcement revealed that the deadline by which residents must report and pay their Capital Gains Tax after selling a residential property in the UK had increased by 30 days. From 27th October 2021, instead of 30 days, residents now have 60 days to report and pay.

This increase will give landlords a little more breathing room to complete their home sales and report and pay their Capital Gains Tax.

Related: A Complete Guide To Private Residence Relief

2. Grants announced to assist landlords in replacing gas boilers and heat pumps

The government announced its Heat and Buildings Strategy earlier in the month, and as part of that, the budget will be funding grants of up to £5,000 to assist landlords in replacing gas boilers with heat pumps. The funds will begin rolling out in April 2022.

Gas central heating systems still feature in the vast majority of rental properties, but the government plans to replace them with heat pumps to achieve zero net carbon emissions by 2025.

In addition to this strategy, the budget has announced that it is pledging £450m to support the growth of the heat pump manufacturing market throughout England and Wales. This funding aims to reduce the cost of heat pumps by up to 50% by 2025.

It will no longer be possible to buy a gas boiler after 2035, and current figures show that a heat pump costs between £8,000 - £18,000 depending on the size required for the property. Landlords will benefit greatly from this range of funding dedicated to bringing their out-of-pocket expenses down regarding replacing the environmentally unfriendly gas systems.

£3.9bn is also going towards making residential dwellings in England and Wales warmer and more affordable to heat.

Related: Green Homes Grant: How Can Homeowners And Landlords Benefit

3. £65m Covid-19 debt fund to support landlords and tenants

Although this isn't technically budget news, the Department for Levelling Up, Housing and Communities has recently launched its £65m fund to assist with Covid-related tenant rent arrears.

Operating on a local level throughout England, the scheme is designed to assist:

  • 950,000 low-income households with rent arrears
  • 1.4 million households behind on their council tax payments
  • 1.4 million households in arrears with their electricity and gas suppliers

In a bid to reduce homelessness, this debt fund is a welcome support following the lifting of the eviction ban and the cessation of the furlough scheme.

National Residential Landlords Association Policy Director, Chris Norris, has suggested that this is insufficient, with pandemic-related rent arrears standing at closer to £300m. Nevertheless, this fund is a welcome support for tenants and landlords alike, and can only help with economic recovery for the property sector.

4. £24bn cash-injection to build affordable homes

The budget announcements complete an estimated £24bn in housing and property-related activity investments. This figure includes £11.5bn pledged towards the development of up to 180,000 affordable homes, with 65% of the funding for homes outside London.

5. Regeneration of brownfield land

Brownfield land is any land that has been previously developed for commercial or industrial purposes, but is no longer in use and may be contaminated. The latest budget has announced an additional £1.8bn in funding to assist in delivering up to 160,000 new residential properties using brownfield land.

A new £9m Parks fund will also give local authorities a budget to spruce up 100 neglected urban spaces into ‘pocket parks’ in built-up locations.

6. Support for lowest-income tenants

The budget announcements included a £2bn fund to support families who claim Universal Credit. The fund is estimated to be worth an approximate average of £1,000 annually to each eligible family.

Starting in December, the amount that the government takes back from Universal Credit claimant workers will decrease from 63p to 55p for every £1 earned.

7. Residential Property Developer Tax rate set at 4%

A new Residential Property Developers Tax is being introduced in April 2022. The tax will apply to developers who report profits of more than £25m. Experts predicted that it would fall somewhere between three and five percent, and the latest budget has now announced it at 4%.

The government has announced that this tax should raise more than £2 billion over the next decade and that it should be time-limited. As yet, there is no commitment in place to repeal the tax once the decade has passed, with the government stating that it will repeal it only once it has raised sufficient revenue.

What does this mean for the property sector?

This rate has been carefully set to a level that is unlikely to create any significant deterrent to residential developers. The set rate will undoubtedly be subject to review over the coming ten years and could see an increase if projections indicate that the government will not achieve the required £2bn revenue within that time.

The revenue resulting from this tax levy will go, in part, towards the removal and replacement of dangerous cladding currently in place on high-rise buildings. This project has received a total funding amount of £5bn as part of the new budget.

Setting the annual allowance at £25m has ensured that the tax will apply to more prominent corporate residential developers rather than smaller-scale developers. Any developer who reports profits under £25m will not be liable to pay this tax.

Currently, build-to-rent developers are not within the eligibility scope of this taxation. The government's response document has expressed that this exclusion stands at this time but will nevertheless be kept under review.

The government has also outlined that care homes will be given an exclusion under the retirement living sector, but that "housing with support" and "extra care housing" will not be included. Student accommodation has also received an exclusion under this tax, so long as the expected occupation of the development exceeds 165 days per year.

Final thoughts

The Autumn 2021 Budget is generally a positive one regarding the property market, as many pledges will go towards supporting development, as well as landlords and struggling tenants. Investments in housing can boost the sector economy and improve the market for all - so hopefully the government can deliver on their promise.

You can watch the Chancellor's full Budget statement here.

If you would like any advice on these changes or if you are interested in buying, selling, or letting your property, get in touch with our property experts today on 020 7099 4000.

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