Budget will hit housing choices for renters

1 Nov 2024 10:54 AM

In the wake of the recent (30 October 2024) Budget – the first Labour Budget in over 14 years – the NRLA has issued its statement responding to the key aspects of the Chancellor’s announcement.

Aside from significant changes to employer National Insurance thresholds and increases in Capital Gains Tax (amongst other changes), the Treasury confirmed that the stamp duty levied on the purchase of second homes will increase from 3% to 5%.

Following this news the NRLA will continue to update its members on what these changes mean for private landlords across the private rental market.

In response to the Budget, Ben Beadle, Chief Executive at the National Residential Landlords Association, recently said:

“Hiking stamp duty on homes to rent when 21 people are chasing every rental property makes no sense. 

“Analysis by Capital Economics has found that increasing Stamp Duty on rental properties from three to five per cent will see a net loss of half a million homes to rent over 10 years. This will not help the huge number of tenants for whom homeownership is still a distant dream.  

“The Chancellor has failed to heed the warnings of the Institute for Fiscal Studies that higher taxes on the rental market lead only to rents going up.

“What tenants needed was a Budget to boost the supply of new, high-quality rental housing. What we got is a recipe for less choice and higher rents.”  

You can read the Budget in its entirety on HM Treasury’s website, which can be found here.

Notes

• Further tax hikes on the rental market would serve only to hurt tenants. Paul Johnson, Director of the Institute for Fiscal Studies, has concluded: “The more harshly that landlords are taxed, the higher rents will be. One of the reasons that private rents have risen so much is that government policy has substantially increased tax payable by private landlords.” See here.  
• According to Zoopla there are now an average of 21 people competing for every rental property, more than double pre-pandemic levels. It notes that: “Increasing the supply of homes for rent is essential to help to alleviate the scale of rent rises in the face of sustained demand.” See here.
• Capital Economics modelling from 2022 suggested that increasing the stamp duty levy on the purchase of additional properties from 3% to 5% would, over ten years, lead to:
  • 230,000 fewer private rented sector properties being purchased and 310,000 more sold (leading to a net. 540,000 reductions in supply)
  • The net fiscal impact would be a reduction of £2.2bn in tax revenue.

The analysis can be accessed here. 

• Further information about the NRLA can be found at