In the Spring Budget on 15 March, Chancellor of the Exchequer Jeremy Hunt predominantly focused on announcing measures relating to economic growth and jobs.
While there were few policies that will have a direct impact on the UK property market, there were some announcements that will indirectly impact the sector, including areas such as the economy, cost of living, tax obligations and levelling up.
Here’s a run through of some of the key announcements from the Spring Budget that could impact property investors.
Inflation levels and energy bills
In January, inflation dipped for the third consecutive month to 10.1%. The Office for Budget Responsibility has forecast that inflation will fall to 2.9% by the end of the year as the UK has avoided a recession.
Some policies that were announced within the Spring Budget were aimed at helping people with the cost of living. And energy costs are an area Hunt announced further support. The Energy Price Guarantee will be kept at £2,500 for a further three months from April to June as this was expected to rise to £3,000.
This is to hopefully help bridge the gap as we wait for wholesale energy prices to fall below Ofgem’s energy cap in July. With this support, there could be fewer rent arrears across the private rented sector.
In recent years, there has been a rise in property investors operating through a limited company. This has been largely due to tax changes. For those who invest in property through a limited company, they are subject to corporation tax, but the percentage some companies have to pay is being increased.
From 1 April, companies that earn over £250,000 in profits will be liable to pay 25% corporation tax. This was previously set at 19%. This won’t affect the majority of property investors but will likely impact investors with larger portfolios the most.
This change is something to consider for those earning near or above the threshold. And if you’re deciding whether or not you should invest through a limited company, it’s recommended to seek professional tax advice to ensure you understand what’s the best option for your circumstances.
Levelling up with new investment zones
The Chancellor also announced there will be 12 new investment zones, including in Greater Manchester and other areas across the North of England and Midlands. He has labelled these as “12 potential Canary Wharfs”.
The government will provide access to £80m of support for raising skills and infrastructure. And more than £200m will also be invested in local regeneration projects. This will likely impact the local and regional property markets where the new investment zones are brought forward.
At Salboy, we are really excited to hear about the potential of a new investment zone in Greater Manchester! This will further elevate the city region as a top area for business, and it could also attract more companies and young professionals to the city region.
If you are interested in UK property investment, particularly in Greater Manchester, here’s a guide packed with tips on how to invest. And to discuss your options, get in touch with our team of expert advisors.