The Growth Plan: How it affects the property market

Following the Growth Plan, the value of the pound slumped and this prompted significant disruption in the financial markets. While many of the tax changes announced were reversed on 17th October, it has still led to many mortgage providers pulling a significant number of deals from the market. As a result there are fewer products available, and those mortgages are now more expensive than before.

Many landlords will face a large increase in mortgage payments, and landlords with borrowings should urgently review when their fixed rate period ends.

Tax tips for landlords

To help you stay ahead of the game, read our Top Tips for Landlords guide, which outlines some of the key tax considerations to improve your net return and identify some of the most common tax pitfalls to avoid.

Mortgages

As a result of current market movements, buy-to-let lenders have been forced to change their lending criteria.  In order to meet this new criteria, a property will need to generate more rental income in order to demonstrate that mortgage and other commitments will be met.

The impact of this means that if you are looking to re-mortgage or purchase a buy-to-let property then the size of your deposit or level of equity becomes even more important in keeping the rate of your mortgage down. Gaining advice from an experienced, independent mortgage adviser who can discuss the changes in criteria and how this may impact you can be invaluable.

TaxAssist Accountants can refer you to independent brokers, who have experience in the buy-to-let market and would be happy to help you review your situation.

The Growth Plan – a reminder of the proposed changes

A significant announcement which will impact the property market is the cut to stamp duty in England and Northern Ireland. This will help individuals buy a home in England and Northern Ireland and may help to stimulate the property market and hold prices up. However, there is no change for the stamp position for limited companies, which are a popular vehicle for landlords purchasing property to rent out.

Landlords should also be aware of new laws as part of the Energy Bills Support Scheme (EBSS) ensuring buy-to-let landlords pass the £400 energy rebate on to tenants with all-inclusive bills. While not many landlords offer all-inclusive bills, it is important for those that do to be aware of the need to pass rebates onto tenants. More details can be found here.

Here is a summary of the main points arising from the Growth Plan which will still affect landlords:

• From 23rd September 2022, the Government increased the threshold above which Stamp Duty Land Tax (SDLT) must be paid on the purchase of residential properties in England and Northern Ireland from £125,000 to £250,000. 
• In addition, from 23rd September 2022, the threshold at which first- time buyers begin to pay residential SDLT will increase from £300,000 to £425,000, and the maximum value of a property on which first-time buyers' relief can be claimed will also increase, from £500,000 to £625,000.
• The 1.25% increase in National Insurance, announced in the Spring Statement will be reversed from 6th November for employees and employers. For further details click here.
• A proposed increase in the corporation tax rate to 25% is set to go ahead from April 2023

If you would like to discuss any of the changes arising from the above tax changes, or need any help with tax planning, please do not hesitate to contact us today by calling 01563 898280 or use our online enquiry form to book a free initial consultation.

Date published 7 Oct 2022 | Last updated 20 Oct 2022

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.