Research and reports
Following a turbulent few weeks for the UK government, Rishi Sunak was named prime minister on 24 October.
What does his appointment mean for buy-to-let landlords when it comes to key issues such as rental reforms, tax changes, and mortgages?
Despite losing out to Liz Truss just a few months ago, Rishi Sunak secured enough support from Conservative MPs to be named prime minister uncontested.
The MP for Richmond in Yorkshire’s main objective is to lead the UK through a ‘profound economic crisis’ and reverse the turbulence caused by Liz Truss and Kwasi Kwarteng’s mini-Budget.
Sunak outlined some of his thoughts on housing during the summer leadership contest, although it wasn’t a major part of his campaign.
Here’s what we know so far:
Meanwhile, Sunak is expected to go ahead with the planned corporation tax rise from 19 per cent to 25 per cent next April.
During his leadership campaign, he said he wouldn’t cut taxes until inflation was brought under control. It’s unclear whether he’ll revisit plans to cut income tax before the next general election.
As part of Rishi Sunak’s reshuffle, Michael Gove was named Secretary of State for Levelling Up, Housing and Communities.
He previously held this role between September 2021 and July 2022, before being sacked by Boris Johnson.
Gove’s return to the cabinet has been welcomed by letting agent trade body Propertymark, as well as housing campaign groups Generation Rent and Shelter.
The MP for Surrey Heath has been praised for his previous work on the cladding scandal and it’s thought that bringing him back into the cabinet will bring continuity and progress to rental and leasehold reform.
The return of Michael Gove suggests that the government’s plans to reform the rental market could be back on the agenda.
It was unclear under the Liz Truss administration if the proposals published by Gove in June’s Fairer Private Rented Sector White Paper would be introduced, although she did commit to scrapping Section 21 evictions.
Ben Beadle, Chief Executive of the National Residential Landlords Association, said progressing rental reforms should be top of Gove’s ‘in tray’.
He said: “Our data shows that most [landlords] can envisage operating without Section 21 provided other proposals, such as on court reform and reformed grounds for possession, have their confidence.
“We will work constructively with the new Secretary of State to ensure the final reform package has the confidence of responsible landlords and tenants alike.
“This includes the need for action to tackle anti-social tenants, scrapping plans that would decimate the student housing market, and reforming the courts to ensure legitimate possession cases are dealt with more swiftly.”
The corporation tax rate is set to rise by six per cent next April, so limited company landlords may face a higher tax bill.
Despite this, the number of landlords transferring ownership of their properties continues to rise.
Estate agency Hamptons’ analysis of Companies House data shows:
The estate agency says that recent buy-to-let mortgage rates have encouraged more landlords to incorporate.
This is because limited company landlords benefit from paying corporation tax and avoiding Section 24 tax changes that reduce their profits.
With the rate of corporation tax increasing next year, the number of buy-to-let companies could start to dip in 2023 as landlords weigh up their options.
One of the biggest consequences of September’s mini-Budget was a dip in financial market confidence.
A number of lenders withdrew products from the market, before reinstating them at much higher rates.
According to Moneyfacts, the average two-year fixed mortgage rate rose to 6.46 per cent and the average five-year fixed rate increased to 6.28 percent, both 14-year highs.
It’s hoped that the appointment of Rishi Sunak as prime minister will stabilise the economy.
A number of mortgage lenders, including Coventry Building Society, Accord Mortgages, and Santander, have already reduced fixed rates by up to 0.5 per cent.
All eyes will now be on Sunak and chancellor Jeremy Hunt as they prepare to deliver an Autumn Statement on 17 November.
The fiscal statement will include forecasts from the Office for Budget Responsibility and will outline the government’s plans for tax rises and spending cuts.
Will Rishi Sunak benefit the buy-to-let market? Let us know in the comments below.
Conor Shilling is a Copywriter at Simply Business with over two years’ experience in the insurance industry. A trained journalist, Conor has worked as a professional writer for 10 years. His previous experience includes writing for several leading online property trade publications. Conor specialises in the buy-to-let market, landlords, and small business finance.
We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
6th Floor99 Gresham StreetLondonEC2V 7NG
Sol House29 St Katherine's StreetNorthamptonNN1 2QZ
© Copyright 2023 Simply Business. All Rights Reserved. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London, EC2V 7NG.