The first Budget of the new government was announced by Chancellor of the Exchequer Rishi Sunak on 11th March. It was somewhat overshadowed by quick and immediate action needed to combat the spread of the global Coronavirus pandemic, but there were still a number of takeaways landlords won’t want to overlook.
The main focus of the first Budget of 2020 was bringing stability to the UK through £12bn of fiscal commitments for the management of the impact of Coronavirus. Sunak promised the NHS whatever resources it needed and £5bn response fund was made available.
Changes were made to support both employees and businesses. Statutory Sick Pay (SSP) is being extended for those who are told they must self-isolate and a hardship fund is available for people who can’t access SSP. Business Rates relief has also been expanded to include a Coronavirus Business Interruption Loan Scheme which will support up to £1bn additional lending for small-to-medium sized businesses.
The Chancellor also made a huge commitment to the economy more generally, with over £600bn being set aside for the infrastructure over the next five-year period.
Policy Changes which Impact Landlords
There are some more specific changes to policy which landlords need to know about and are directly going to impact the property market. This Budget saw the Chancellor confirm some things we knew were likely to become law this year including:
- A Stamp Duty surcharge will be applied to all non-UK residents purchasing property. This new surcharge rate will be 2%. It will only impact on investors outside of the UK and will not affect limited companies in the UK, even where shareholders may live abroad.
- An increase in National Insurance contributions will result in a saving in excess of £100 per year. The contributions threshold his becoming increased to £9,500 rom £8,632.
- Corporation Tax will not be reduced as had already been announced. This is due to the Coronavirus commitments and it will stay at its current rate of 19%.
- Entrepreneur’s Relief has been reduced from a £10m lifetime limit to a £1m limit per person.
- A commitment of £1bn to tackle all forms of unsafe high-rise cladding in the wake of Grenfell Tower. This investment is specifically for the Building Safety Fund.
- £643m has been ring-fenced for tackling the country’s rough sleeping problem, with accommodation and support services being developed and provided with some of the funds.
- £12bn has been made available for affordable housing, with a social housing provision within this.
2020 for Landlords
The Budget of 2020 has a number of key changes which will impact the property market. The Stamp Duty change was something we all expected but many other changes which may have occurred have been put on hold with the need to focus in on dealing with the current health crisis and the impact this may have on the economy. Some sources have commented that the Budget hasn’t done enough for tenants or the demand for rental property, but these are changes which can be lobbied for before the next Budget, when we can hope the current health crisis is under control.