As Rishi Sunak completes his first full week as Prime Minister, it’s worth looking back at his original pledges in his initial election race to predict what we can expect from the former Chancellor. How will Sunak’s plans impact landlords, and how will the rental market be supported under the new government?
After a chaotic couple of months resulting in a swift exit from government for Liz Truss and Kwasi Kwarteng, all eyes will be on Rishi Sunak and Jeremy Hunt at the Autumn statement in a couple of weeks’ time. Two weeks ago, the country got a taster of Hunt’s plans as the new Chancellor of the Exchequer when he rushed out cuts to some of the announcements from the mini-budget. After delaying the Autumn Statement, many are now concerned about what the future of the economy will mean for their households amidst the ongoing cost-of-living crisis.
As the property market adjusts from yesterday’s Bank of England Base Rate rise, many landlords and homeowners alike remain worried about their mortgages. SWAP rates have, on the whole, settled with Sunak and Hunt’s arrivals to office, but no one at this stage can foresee what impact the Autumn budget will have on the economy.
What Can We Expect from Rishi Sunak?
Sunak’s first public address outside 10 Downing Street made it clear he aimed to stick as closely as possible to the Conservative 2019 party manifesto. Since then, we’ve seen Michael Gove return to the position of Secretary of State for the Department of Levelling up, Housing and Communities. Gove’s return could suggest the private rental sector should prepare for many issues stated in the Levelling Up White Paper to come into force. These include the contentious erasure of the Section 21 bill, the Landlord Portal, and the new Decent Homes Standard.
Focusing more specifically on Rishi Sunak’s plans, it’s fair to say that only time will tell. From his first PMQs, there’s speculation he will adapt Truss’ plans for the New Investment Zones to take a much more Brownfield approach. Instead of using new land to develop areas across the UK, Sunak will likely choose to allow for the works to happen on pre-existing sites.
Accounting firm BDO predicts Sunak could allow Local Authorities to increase Council Taxes by larger increments than usually permitted from next April. This expectation from BDO is just one of many tax rises that industry experts predict for the Autumn statement. Hunt’s announcement last month confirmed the rise in Corporation Tax to 25% for businesses with profits exceeding £250,000, which is also meant to come in from April 2023. There has also been a growing assumption that a review of Capital Gains Tax may be on Hunt’s list.
Other tax changes we could see announced include a possible amendment to tax relief on pensions. As it stands, pension tax relief reduces the amount of tax you pay to help boost your savings for the future, and is based on your income tax rate. This will leave many households concerned over their futures and will be a highly unpopular move from the new Prime Minister.
With the Base Rate now at 3% and expected to rise again in January, many property investors remain worried over the future of their portfolios. If you would like to keep up with the latest news concerning landlords and property investors, sign up for our Investor Update. We send two emails a week, featuring topical articles and providing expert advice, as well as some of the mortgage rates currently available. Alternatively, speak to one of our brokers today to see what options are available to you.
4th November 2022