UK Chancellor Jeremy Hunt delivered his Autumn Statement to parliament last week, setting out tax and spending plans and outlining new opportunities for the UK property market in a bid to boost slowing activity. While some predictions for the Statement proved to be untrue, property investors can benefit from new plans announced by the Chancellor.
‘Investment zones’ provide new opportunities for the UK property market
The Chancellor has announced the details of a £160m 'Investment Zone' in Manchester which is predicted to create around 32,000 jobs as public funding will be spent on the region's advanced manufacturing sector, infrastructure and businesses over the next 10 years. As a result, this initiative is expected to attract around £1.1billion of private sector investment to the region, making now a prime time for property investors to consider the Manchester area.
The same initiative is expected to create more than 30,000 jobs and attract £5.5 billion of investment over 11 years in the West Midlands, another ‘Investment Zone’ demarcated by the Chancellor. The zone will cover the region but will be focused on three specific sites, namely Warwickshire, a Birmingham Knowledge Quarter and a Wolverhampton Green Innovation Corridor. Additionally, sites within the Warwickshire and Birmingham areas will be offered tax relief and business incentives such as funding roads and power facilities.
Initially announced in March in the Spring Budget, the ’Investment Zones’ also include the north-east, South Yorkshire, West Yorkshire, East Midlands, Teesside and Liverpool. These regions are forecast to see growth over the next decade thanks to the initiative and public funding, and property investors are presented with an opportunity to investigate these regions as they develop and grow.
Stamp duty thresholds stay the same
There was speculation around whether the government would make further changes to stamp duty land tax, with an increased threshold and more help for first-time buyers initially being discussed. The Chancellor has however decided to stick with the current thresholds that will remain in place until March 2025. Under these rates, property buyers still pay no tax on the first £250,000 of their purchase.
Self-employed landlords might benefit from tax cuts
Landlords who are self employed can now benefit from new tax cuts that will affect around two million people in the UK. The cuts include an abolishment of class 2 national insurance for self employed people earning more than £12,570 a year. This means that affected self employed people will not need to pay a current compulsory charge of £3,45 a week, saving around £192 a year. According to the 2021 English Private Landlord survey, around 39% of landlords with five or more properties were self employed, so landlords with larger portfolios will more likely be affected.
Treasury aims to assist tenants
As a result of the Statement the National Treasury has pledged to increase the Local Housing Allowance, with rent currently accounting for more than half the living costs of tenants on the lowest incomes. This means the Housing Allowance will increase to cover the lowest 30% of rents across the country which is estimated to give 1.6 million households an average of £800 in extra support next year.
New measures to support house building
As tenant demand for properties continues to increase and availability of rental stock struggles to keep up, the Autumn Statement included some proposed plans aimed at house building. In a move to unlock more than 40,000 new homes and ease demand on the housing market the Chancellor promised to invest over £110 million in the industry, and additionally said he would invest over £32 million to ease planning backlog and develop new housing in city hubs such as Cambridge, London and Leeds.
Hunt also promised a consultation into new permitted development rights which would allow any house to be divided into two flats, provided the exterior remains unaffected.
First time buyers can benefit from the Mortgage Guarantee Scheme
The Mortgage Guarantee Scheme, which was expected to be closed to new accounts on December 31 2023, has been extended until the end of June 2025. The scheme encourages lenders to offer mortgages with a 95% loan-to-value and is designed to help first-time buyers with smaller deposits. Through the initiative, which was launched during the Covid pandemic, buyers can put down 5% of the total value of a home worth up to £600,000 as a deposit, while the remaining 95% is covered by a mortgage. While there are still limitations applicable to buyers, the scheme does create opportunity for first time buyers who are otherwise overwhelmed by the market.
Seeking professional guidance
For those looking to invest in the UK property market and the many opportunities presented in the Autumn Statement, Tailor My Property has an expert network of property, mortgage and finance professionals who are able to advise and assist with a wide range of specialist queries.