Agents and landlords disappointed with budget of 'missed opportunity'

Yesterday George Osborne delivered his eighth budget as chancellor, announcing an extra £3.5 billion in spending cuts by 2019-20.

The Office for Budget Responsibility (OBR) has forecast that the UK economy will expand by 2% this year, 2.2% in 2017 and then 2.1% in 2018, 2019 and 2020. 

Osborne said that the OBR was looking to offer 'long-term solutions' to 'long-term problems'.

The chancellor repeatedly referenced the future, saying it was a 'budget for the next generation' and that the UK needs to put 'the next generation first'. 

There were a number of housing and property-related announcements, however there was a lack of 'headline grabbing' measures like the ones announced in the Autumn Statement and last year's Summer Budget.

For the lettings sector, the biggest news is that residential property sales will be excluded from a cut in Capital Gains Tax (CGT), being introduced on April 6.

In three weeks' time, Capital Gains Tax will be cut from 28% to 20% for higher rate taxpayers and from 18% to 10% for basic rate taxpayers.

Excluding property sales from this measure has been condemned by a number of property market commentators and is regarded as another blow for the UK's landlords.

“This is now the third Budget which directly attacks landlords,” says David Cox, managing director of the Association of Residential Letting Agents. “The sector has been punitively taxed, with stamp duty on buy-to-let properties, mortgage interest relief and now capital gains tax changes. It’s an outright assault.”

“Every other sector has been offered a tax break – yet there is nothing here to help the private rented sector, including landlords – and most importantly tenants – who will see rent costs rise to subsidise the taxes that landlords pay on property,” he says. 

The National Landlords Association's chief executive, Richard Lambert, is also disappointed.

“The steady upward ratchet of taxation on landlords over the past year shows that George Osborne is determined to bear down on the private rented sector, but he still depends on the tax revenues he expects to pull in from them,” he says.

“The NLA called for a short term easing of CGT to allow landlords to restructure their portfolios or to exit the market altogether but it appears that however much he wants us out, he can’t afford to allow us to leave.”

Meanwhile, the Residential Landlords Association has described the exclusion of property sales from CGT cuts as a 'missed opportunity'. 

"The Chancellor continues his attack on rented housing despite all the evidence showing that landlords are taxed more heavily than home owners and that they buy and improve many properties that otherwise are left empty,” says Alan Ward, RLA chairman. 

There were few new property measures in yesterday's budget. However, the 3% stamp duty surcharge on the purchase of buy-to-let properties and second homes was confirmed and the new rules will go ahead from April 1. 

The Chancellor did announce, contrary to speculation, that larger investors will not be exempt from the stamp duty changes – meaning all purchasers of buy-to-let properties will pay the additional tax. 

Other measures included a reform of the commercial property stamp duty system and a £1,000 a year tax-break for people letting out homes via websites like Airbnb.