The Autumn budget has been announced and of course the Widley anticipated tax rises have been incorporated. Read our article below to see what 2023 has in store.
There is a large financial black hole and the Government need to fill this together with reducing the debit.
There is now a 40 year high when it comes to inflation with energy bills, food and drink prices and everything else continuing to spiral out of all control.
What does it mean for landlords within the residential and commercial markets from now on?
United Kingdom residential landlords.
The capital gains tax allowance will now affect landlords across the board being reduced from £12,300 to £6,000 from April 2023.
It will then be further reduced to £3,000 from April 2024.
The further cut to capital gains tax exception is another blow against landlords who are thinking of selling their property. But, it could have been a lot worse.
We doubt whether there will be a major sale of properties but you never know.
Most landlords have now faced a series of tax heights in recent years but private rented property accounts of 1 in 5 of English households. With the cost of living rising so quickly it could encourage landlords to remain in the sector and keep the downward pressure on rents. Every landlord will have to make their own decision.
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Stamp duty cuts.
Stamp duty cuts have also been reversed. By reversing the stamp duty cuts announced in September to April 2025 the Government has in effect announced a 28th Month stamp duty holiday. The limit of £250,000 will reduce in April 2025 and there could be a last minute rush for first time buyers. However, with the increase cost of borrowing you could see house prices fall. We understand that most property professionals expect property prices to reduce by at 10% in the next year and stagnate thereafter but it just depends on what happens with the mortgage rates. The Government are hoping that this statement will help to calm the mortgage markets and bring the interest rates down on longer term rates. It is a definite wait and see policy at the moment.
Commercial property.
There are no real major surprises within the commercial property market, they are very much in line with the residential. The only issue would have been the rise to corporation tax to 25% by April 2023 which had already been confirmed. There may be opportunities with previously announced investment zones, which are areas designed to stimulate regeneration in local economies but further details are still awaited.
The Government as well as the OBR (Office for Budget Responsibility) indicate that we are likely to go into recession for the next 2 years before we come back out.
There is still a shortage of properties on the rental market. Confirmed by Zoopla and Rightmove over the past months. Demand still remains high with rents still increasing although this may start to change with the cost of living starting to hurt further with peoples disposable income being affected by the freeze of personal tac allowances.
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What can landlords expect in 2023?
There is a list of things that will be proposed for landlords over the next 12 months. Some of these are as follows;
Renters reform bill.
This is currently in drafts however the Government are going to amend it further. With the recent exceptionally tragic case of where a 2 year old died through damp and mould at a social housing property. Unfortunately, the Government have decided it should now include provisions for condensation and damp. Landlords would need to adhere to. It could shake up the market quite a lot.
The renters reform bill will come out later in the year which includes the scraping of section 21 notices. Also extending the decent homes standard. Landlords should watch out for further announcements from the Government.
Corporation tax will increase to 25% in April and if you have incorporated into a company this could affect you. We expect interest rates and inflation to continue to rise.
There is the increase in minimum energy performance coming through in 2023. There will be more money coming out for landlords to expend.
It could be a difficult 2023 for landlords. However, the market is still extremely strong with rents forever increasing. Demand out striping supply.
Underinsurance.
Why not read our article here regarding underinsurance. Make sure you are insured for the right amount for your property. This could affect your claims in future.
