A prominent supplier is warning that measures announced in the Budget will hit the agency industry.

The minimum wage for over 21s, known officially as the National Living Wage, will  rise from £11.44 to £12.21 an hour from April. For 18 to 20-year-olds, the minimum wage will rise from £8.60 to £10, and apprentices will see pay jump from £6.40 to £7.55 an hour.

Meanwhile the rate that employers pay in National Insurance contributions will rise from 13.8% to 15% on a worker’s earnings above £175 from April. The threshold at which employers start paying the tax on each employee’s salary will be reduced from £9,100 per year to £5,000 although the Employers Allowance – the amount employers can claim back from their National Insurance bill – will also rise from £5,000 to £10,500.

Nick Lyons, chief executive of inventory supplier NoLetting Go, says: “For letting agencies and the enormous number of small suppliers that agents all depend on so heavily are all very heavily people dependent, so the increase in the minimum wage and the rise in employer NI contributions will have a massive effect. This will inevitably be passed on to landlords or they will have to absorb the costs. I suspect that some of the smaller players will reconsider whether running a small business is worth it. I think that some businesses may also look to technology to aid expansion instead of taking on additional staff.”

In response to another Budget measure – the surprise increase in stamp duty on additional homes from 3% to 5% – he adds: “I can’t see any measures that will grow the private rental sector – so it looks like supply will continue to be restricted which means rents continue to rise.”

Another supplier, online valuation operator The ValPal Network, describes the B budget as “disappointing”.

Director Craig Vile says: “It is disappointing that Rachel Reeves declined to offer specific support to the many thousands of would-be first time buyers struggling with affordability – that would have given the market an immediate boost.

“That said there was nothing in her measures that is likely to impact negatively on what is now a recovering market. Hopefully the continued downward trend in interest rates will continue and we will see that recovery grow organically as we approach 2025.

“On the lettings side, I was pleased to see landlords escape second home Capital Gains Tax increases, but the rise in Stamp Duty for second homes to 5% may deter some from expanding their portfolios or even entering the sector in the first place.

“This is obviously going to affect the supply of rental homes and maintain upward pressure on rents as we move forward. And that is the price paid for by the tenants.”

(The ValPal Network is a product of Angels Media, published of the ‘Today’ industry websites).