The Labour government's autumn budget introduced changes that affect landlords, with a mix of increased costs and sustained incentives.
A significant change is the increase in the stamp duty surcharge on additional properties from 3% to 5%, which makes new buy-to-let investments more expensive for landlords. For properties valued between £250,000 and £925,000, the total stamp duty will now be 10%, which may deter some investors from expanding their portfolio. This change reflects Labour's intention to address housing affordability while indirectly slowing rental sector growth by lowering incentives for new acquisitions.
On a more positive note, the anticipated overhaul of capital gains tax (CGT) was not fully implemented, with rates remaining at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers, albeit with some thresholds adjusted. Many landlords have been relieved, as they had feared that higher rates would align with income tax, potentially leading to a rush to sell properties. The unchanged rates mean that fewer landlords will offload properties, which will help to stabilise the rental market in areas where demand is already high and supply is limited.
In addition, the government intends to enact new rental regulations aimed at improving tenant safety, fire prevention, and quality. Although beneficial to tenant welfare, these compliance requirements require landlords to invest more in property maintenance to avoid penalties. With rent control measures also being considered, landlords face a complex landscape that necessitates careful financial planning and compliance in order to maintain profitable rental operations in the face of regulatory and tax changes.
