The new Chancellor of the Exchequer, Kwasi Kwarteng, has made a series of announcements which could have a major impact on the UK’s property market. Here Maunder Taylor, independent estate agents based in Whetstone and Potters Bar, outline the major points of his statement and the potential implications for homebuyers, landlords and tenants.
Stamp Duty
Homebuyers won’t have to pay any stamp duty on properties which cost £250,000 or less – and this is effective immediately. The threshold at which first-time buyers have to pay stamp duty is now £425,000.
Like former chancellor Rishi Sunak’s stamp duty ‘holiday’ of two years ago, this is a bid to kick-start the economy, and particularly to improve the nation’s overall growth statistics, as the home-buying market is an essential barometer for the health of many country’s finances.
The Government estimates that around 200,000 people will be spared paying any stamp duty at all. However, the overall effect on the housing market is uncertain; at a time of limited housing supply and rising interest rates, there are fears that any potential buyers will still face rising prices as well as high mortgage repayments once they move in. Faced with the prospect of higher interest rates, many mortgage providers withdrew some of their products (particularly fixed-rate ones) last week.
There has been no change in stamp duty on commercial properties – so anything which comes under the category of ‘mixed use’ or ‘non-residential’ won’t be liable for the duty provided the sale price is £150,000 or less.
Tax Levels
Mr Kwarteng also announced a 1% cut in the basic rate of income tax. This means that, effective from April next year, anyone earning between £12,571 and £50,270 will only pay 19p in the pound rather than 20p. Other measures have also been introduced which are aimed at putting more money into people’s pockets, whether they are landlords, tenants or homebuyers; the National Insurance increase of 1.25p in the pound, which was brought introduced in April this year, has now been reversed which should benefit employers and workers alike.
Originally the Chancellor also planned to abolish the top rate of income tax (45%) effective from April next year. High earners would only have paid a maximum of 40p on every pound they earned. However, he has since scrapped this idea following protests from Tory MPs and the uncertainty in the financial markets. (The Bank of England was forced to buy £65billion of Government bonds to calm traders’ fears after the mini-budget was first announced).
The planned corporation tax increase, from 19% to 25%, which was also planned for April 2023, has been scrapped too – which is good news for businesses (and potentially their landlords).
Businesses may also benefit from the so-called ‘enterprise zones’ which the government is committed to pushing forward as a key policy initiative. These will be low-tax, low-regulation areas which will be offered measures such as zero business rates or stamp duty, as well as a simplified planning process. However, there may be some local opposition to these.
Energy Price Caps – a Recap
These were not mentioned in the Chancellor’s statement but have been announced in the past three weeks by the Government, and they should alleviate some of the pain caused by rising prices – for businesses, landlords and tenants.
From October 1, the typical household’s energy bill shouldn’t rise beyond £2,500 a year for the next two years – although what you will pay will still depend on what you use. The previously announced £400 fuel bill discount will still go ahead; for most people this will show up automatically as a deduction from their monthly direct debit, spread over the next six months.
Wholesale energy prices will be capped for all organisations – including businesses, charities and schools – for six months from the beginning of October. The unit price will be fixed at 21.1p per kilowatt hours (kWh) for electricity and 7.5p per KWh for gas, and the savings will begin to appear in November’s bills, backdated to October.
Maunder Taylor – Independent Estate Agents in Whetstone
Maunder Taylor has many years of experience acting for those interested in commercial property investment, as well as landlords and tenants, in and around North London.
Whether you are looking to buy or sell a home, let it out to someone or invest in commercial premises, we have a department which can help you. Our legal team can also assist you if you have a property-related dispute which you cannot resolve.
If you would like to know more about any of our services, follow this link and fill in the online form; you can also call our Whetstone office on 020 8446 0011 or our Potters Bar office 01707 665 666 for any residential management queries.