Budget 2020: Little for landlords as focus on Coronavirus

13 Mar 2020 02:34 PM

New chancellor Rishi Sunak didn’t have much to offer landlords when he delivered his first budget in the Commons yesterday. 

The RLA was disappointed the Chancellor did not take positive action to help reverse the fall in the supply of homes to let by reviewing the tax system as outlined in the association’s submission. Its calls included proposals for stamp duty and Capital Gains Tax exemptions.

The private rented sector was barely mentioned at all in the Budget, with housing announcements focusing on housebuilding, homeownership and social housing. 

Housing announcements included:  

• Housing Revenue Account lending rate – The rate for discounted Public Works Loan Board (PWLB) lending to support social housing will be reduced to 80 basis points above gilts for local authorities in England, Scotland and Wales
• Future of Public Works Loan Board lending terms – The government will consult on revising the terms of PWLB lending to ensure that local authorities can continue to invest in housing, infrastructure and frontline services.
• Rough sleeping – The Budget confirmed the £237 million announced by the Prime Minister for accommodation for up to 6,000 rough sleepers as well as £144 million for support services and £262 million for substance misuse treatment services. Expected to help more than 11,000 people a year, it aims to get people off the streets and help them to maintain a tenancy.
• Affordable Homes Programme – The Budget announced an additional £9.5 billion for the Affordable Homes Programme to build affordable homes across England. 
• Housing infrastructure allocations – The Budget confirmed allocations from the Housing Infrastructure Fund totalling £1.1 billion for nine different areas to stimulate housing growth.
• Single Housing Infrastructure Fund – The government said it will launch a new long-term Single Housing Infrastructure Fund to create new homes in areas of high demand across the country by funding strategic infrastructure and pulling together land for development.
• Brownfield Housing Fund – The government launched a new £400 million brownfield fund for local authorities with the aim of creating more homes by bringing more brownfield land forward for development. 
• Future Homes Standard – In due course government will announce plans to improve the standards of new built homes.
• Building Safety Fund – The Budget confirmed an additional £1 billion to remove unsafe cladding from residential buildings above 18 metres.
• HM Land Registry (HMLR) – HMLR will be provided with £392 million to transition from a Trading Fund into part of central government. 

Coronavirus

Elsewhere the budget focussed on tackling Coronavirus and supporting those affected.

These plans included measures that could affect landlords with tenants on benefits.

Among temporary measures introduced were changes meaning: 

• People will be able to claim Universal Credit and access advance payments where they are directly affected by COVID-19 (or self-isolating), without the current requirement to attend a jobcentre.
• For the duration of the outbreak, the requirements of the minimum income floor in Universal Credit will be temporarily relaxed for those directly affected by COVID-19 or self-isolating, ensuring self-employed claimants will be compensated for losses in income.

For the RLA’s advice on Coronavirus click here.

Other key policy decisions in the Budget which could affect landlords included announcements on welfare, tax and flooding.

Welfare

• An increase in the repayment period for Universal Credit advances and reduction in the maximum debt deduction cap on the Universal Credit standard allowance – From October 2021, the period over which Universal Credit advances will be recovered will increase to 24 months, while the maximum rate at which deductions can be made from a Universal Credit award will reduce from 30% to 25% of the standard allowance.
• Enhancing Housing Benefit compliance – The Budget provides further investment of up to £12 million per year in local authority resource to maximise their capacity to tackle Housing Benefit fraud and error.
• Universal Credit to Pension Credit transition – The Budget confirms funding for an operational change to ensure claimants do not experience a gap in their benefit entitlement when moving from Universal Credit to Pension Credit.
• Universal Credit: transitional protection for former Severe Disability Premium
• (SDP) claimants – The government confirmed funding to increase the rate of transitional payments for claimants in receipt of Severe Disability Premium when they move to Universal Credit.
• Universal Credit rollout –The government expects rollout to complete by September 2024.
• Universal Credit: surplus earnings – The Budget confirmed funding for a delay to the reduction of the Universal Credit surplus earnings threshold, so that only large income spikes above £2,500 will be taken into account. The threshold will be reduced to £300 in April 2021.
• Changes to the duration of high level sanctions – The government is removing the three-year sanction from Universal Credit and Jobseeker’s Allowance. This will bring high level sanctions to 13 weeks for the first failure to comply with conditionality or work search requirements and 26 weeks for each subsequent failure, making 26 weeks the duration of the longest single sanction in Universal Credit and Job Seekers Allowance.
• Migrants’ access to benefits – The government is aligning EEA migrants’ access to non-contributory benefits with non-EEA nationals. This will apply to EEA migrants arriving in the UK under the new immigration system, from January 2021.
• Porting of Support for Mortgage Interest (SMI) loans – As announced in June 2019, the government will amend the SMI loan regulations to allow recipients moving home to transfer their existing loan to their new property.
• Extending Shared Accommodation Rate (SAR) exemptions– The government is introducing exemptions from the SAR for claimants of Universal Credit and Housing Benefit covering rough sleepers aged 16-24, care leavers up to the age of 25, and victims of domestic abuse and human trafficking.

Connection to Broadband

New build homes’ connectivity – The Budget announced that DCMS will shortly publish a consultation response which will confirm the government’s intention to legislate to ensure that new build homes are built with gigabit-capable broadband.

Flood Protection

Flood defences – Starting in 2021, the government will invest £5.2 billion in a six-year capital investment programme for flood defences. This investment will better protect 336,000 properties from flooding.

Place-based resilience schemes – The government confirmed a new £200 million package of place-based resilience schemes to ensure faster recovery for rural, urban and coastal communities most at risk of flooding.

Winter flood defence fund – The government will provide £120 million to repair flood defences which were damaged in the floods in winter 2019-20.

Tax Decisions

Non-UK resident Stamp Duty Land Tax (SDLT) surcharge – The government will introduce a 2% SDLT surcharge on non-UK residents purchasing residential property in England and Northern Ireland from 1 April 2021. This will help to control house price inflation and to support UK residents to get onto and move up the housing ladder. The money raised from the surcharge will be used to help address rough sleeping.

Housing co-operatives: Annual Tax on Enveloped Dwellings (ATED) and Stamp Duty Land Tax (SDLT) – To make the taxation of housing co-operatives fairer, the government will introduce a relief for qualifying housing co-operatives from the ATED and the 15% flat rates of SDLT on purchases of dwellings over £500,000. The SDLT relief in England and Northern Ireland will take effect from Autumn Budget 2020 and the UK-wide ATED relief from 1st April 2021 with a refund available for 2020-21.

Future of Making Tax Digital – The government will publish an evaluation of the introduction of Making Tax Digital for VAT, along with related research.

Funding HMRC to prepare for breathing space – The government will invest an additional £12.5 million in HMRC in 2020-21 to begin work immediately on ringing in breathing space. From early 2021 this will mean that those in problem debt can access a 60-day breathing space, including for debts to HMRC, while they engage with debt advice and work towards a sustainable debt solution.

Full details of the budget announcements can be found in the budget red book here.