Spring Statement 2022 – What is the Impact on Buy-to-Let?

The Spring Statement was focused on addressing the cost of living in the UK. But what impact will the Spring Statement have on buy-to-let investment and landlords?

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Will Buy-to-Let Investors Benefit from the Tax Cuts?

Chancellor Rishi Sunak announced a 1p income tax cut and an increase of the National Insurance threshold.

The National Insurance threshold will increase by £3,000 in 2022 to £12,570 estimated to save £6 billion a year for 30-million people.

By the end of the current Parliament in 2024, the basic rate of income tax will be reduced from 20p to 19p in the pound, which the Chancellor advised would equate to a £5 billion tax cut for 30-million people.

Some buy-to-let landlords will fall into a higher tax band with thresholds and allowances not being increased. This is why how you buy a property is as important as what you buy. Did you know that over a 5-year period, you could improve your returns by 66% by buying property in a limited company? Click here to read more and to find out how easy and cost-effective it can be.

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No Stamp Duty Increase for Buy-to-Let

There was speculation that the stamp duty for buy-to-let property and additional homes in England would increase in-line with the rate paid by property investors in Scotland and Wales, but the government decided against the change.

With the high level of demand for good quality rental property and limited supply, private buy-to-let investors are crucial to the UK rental market.

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Reversing the Stamp Duty Surcharge

Before the Spring Statement, the National Residential Landlords Association (NRLA) recommended that the government scrap the stamp duty surcharge, which did not happen to the disappointment of many property investors.

The NRLA argued that allowing buy-to-let property investors to pay the same stamp duty rates as a home buyer could generate £10 billion in additional corporation tax. The survey undertaken by Capital Economics found that an addition 900,000 private rental homes would be made available over a 10-year period by scrapping the surcharge.

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VAT Cut for Green Energy

New regulations coming into effect in 2025 requiring rental properties to achieve a minimum energy rating of C for new tenancies and existing tenancies by 2028 means that older and less energy efficient rental properties will need to be upgraded, which can be costly.

The Chancellor announced the VAT cut for the purchase of heat pumps, insulation and solar panels. For the next 5-years, zero VAT will apply to the purchase of materials for improving energy efficiency of their properties. These tax savings are estimated to be worth £1,000 with £300 annual savings for energy bills, helping tenants reduce their cost of living.

With the increase in the cost of living, rental demand is expect to increase for more energy efficient properties.

Click here to read more about the minimum energy standards for rental properties.

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Increase Your Returns by 66% by Buying Property Tax Efficiently

With the current levels of inflation it has never been so important to consider how to preserve your capital.

If you have cash savings in a low interest bearing bank account, its value will be decreasing in real terms. Buy-to-Let property is an excellent vehicle to invest your money, with high levels of property price growth forecast for the next 5-years, in addition to profit from rental income.

Regency Invest identify areas of high price and rental growth, to provide positive cash-flow investment properties at below market value prices with a whole range of incentives available.

Speak with one of our property experts today to find out how we can help you with your next buy-to-let property purchase.

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