Budget 2021: What it Means for UK Landlords

Today’s budget was much anticipated by many, not least landlords awaiting news on the likes of stamp duty, Capital Gains Tax and financial help for tenants. Here’s the lowdown on what Rishi Sunak’s March budget means for the UK’s buy to let property investors and landlords.

In the midst of what has to be one of the most anticipated budgets for years, there is some initial good news for landlords, although industry commentators have expressed concerns over the lack of financial support for landlords with tenants in rent arrears.

Stamp duty holiday extended

With the aim of easing the rush to complete purchases before the existing stamp duty holiday ends, Sunak announced that the £500,000 nil rate band for residential properties would be extended from the end of March to 30 June. In a move to ease the transition back to normal, the nil rate band for Stamp Duty Land Tax will be £250,000 until 30 September, and will only return to the regular rate of £125,000 from 1 October 2021.

Landlords can therefore continue to benefit from the stamp duty holiday, and potentially thousands of pounds worth of savings when expanding property portfolios over the next few months. Property investors will still have to pay the three per cent surcharge though on second homes and buy-to-let properties.

Corporation Tax to rise, but only for higher profit companies

From April 2023, landlords operating as limited companies could see their Corporation Tax rate rise from 19 per cent to 25 per cent, although where profits are £50,000 or under, there will be no change to the rate.

The dividend tax threshold will remain at £2,000.

Capital Gains Tax threshold freeze

The chancellor didn’t make any changes to Capital Gains Tax rates in this budget, despite widespread fear of a hike. He instead promised to freeze the current thresholds until April 2026.

So, for the time being, individuals, personal representatives and some types of trusts can benefit from a £12,300 threshold before paying tax on profits from asset sales, whilst most trusts will be subject to a £6,150 threshold.

Universal Credit and furlough extension

In a move that will spell good news for tenants struggling to make rental payments, Rishi Sunak also extended the Universal Credit uplift of £20 per week for a further six months.

He also prolonged the furlough scheme to the end of September, meaning that potentially, landlords will see their tenants able to continue covering their rent for the foreseeable future.

Industry reaction

With any budget comes good and bad news, and of course the obligatory industry comment. Let’s see what some property leading lights have to say.

Ben Beadle, National Residential Landlords Association chief executive, felt unimpressed by the lack of support for tenants and landlords provided by Rishi Sunak’s budget. He said, “He has failed to provide the sector with the financial support needed to pay off rent debts built as a consequence of the virus.

“Without help to get arrears cleared, many tenants face the prospect of losing their homes and having damaged credit scores, which will undermine the government’s efforts to help generation rent become generation buy.”

Timothy Douglas, Propertymark policy & campaigns manager said, “Extending the increase to the Universal Credit Standard Allowance and the furlough scheme until September will help tenants plan ahead but much more is required to avoid a mounting crisis in the private rented sector.

“As the impact of COVID continues to bite and unemployment rates rise, we are increasingly concerned about how tenants will avoid future rent arrears and landlords will remain incentivised to stay in the rental market. There is a real need for the UK Government to ensure a wider package of measures to help tenants and landlords keep the rent flowing.”

Isobel Thomson, chief executive of Safeagent, said: “It has been an incredibly tough 12 months for many in the private rented sector, and while it is positive to see additional support such as the extension of  furlough and the Universal Credit uplift, this Budget leaves a gaping hole in financial support for the PRS.

“We first raised the proposal of grants for landlords in August 2020 in line with grants for other self-employed people. It is a real concern that this budget failed to offer any support for private landlords who are crucial to providing homes in the PRS.”

You can read Rishi Sunak’s budget details in full here.

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