Chancellor Jeremy Hunt presented his Autumn Statement last month, revealing the government’s tax and spending plans for the next financial year.
The biggest news for the private rented sector was that Local Housing Allowance will be unfrozen. In April 2024, it will be raised to cover the lowest 30% of rents in each local area – long requested by industry organisations including PayProp.
According to the Chancellor, the uplift will be worth an average of £800 a year for 1.6 million households. Low-income households should also get more breathing room thanks to a 6.7% increase to Universal Credit and other benefits as well as a £1.02 per hour increase to the National Living Wage. Meanwhile, retired tenants will enjoy an 8.5% increase to their state pensions.
However, the boost to the LHA is also a one-off. If strong rental growth continues, payments could quickly fall behind market rents again.
No help for landlords
Ahead of the budget, the industry also called on the government to scrap Section 24 and give landlords full tax relief on the cost of their mortgage interest payments again.
Section 24, which came into full effect in 2020, has been blamed for reducing investment in the private rented sector, driving up rents and increasing homelessness. Earlier this year, the Levelling Up, Housing and Communities select committee called for a review into landlord taxation. But Housing Secretary Michael Gove rejected any changes to landlord taxes in October, and none appeared in the Chancellor’s budget either.
Landlords are unlikely to stop campaigning for change. This isn’t the first time that their calls for an overhauled tax system have been knocked back. But for now, smaller landlords especially are voting with their feet.
What else was in the budget?
The housing market has been severely affected by a lack of supply, and the Chancellor unveiled a couple of policies intended to help close the gap.
To speed up planning application processing, local authorities will be allowed to charge builders bigger fees in exchange for giving them a set deadline for a decision. Councils that miss the deadline will have to give back the money.
Additionally, homeowners who convert a house into two flats will no longer need planning permission, as long as the building’s exterior doesn’t change. This could help create more supply of smaller homes for renters and first-time buyers.
However, industry insiders warn that it could pave the way for low-quality conversions while reducing the stock of family-sized homes.
While the increase to Local Housing Allowance is welcome, the Autumn Statement has been called a missed opportunity for the private rented sector. The changes announced are considered unlikely by some to deliver the necessary boost to investment.
Other landlord headlines
Landlord confidence increases as tenant demand rises – Mortgage Strategy
Councils charge landlords thousands of pounds for “officer time” – Landlord Today