Looking ahead at the 2023 lettings market
Now that 2022 is behind us, let us look ahead to the coming months and what we can expect to see in the lettings industry and the current market conditions.
As well as the introduction of the Renters' Reform Bill, there are changes on the horizon for the short-term let sector, as the government looks to boost housing supply in different UK regions.
The energy price guarantee will downgrade in March 2023 - although there's extra support for low-income households - and landlords have been given some breathing room as Making Tax Digital for Income Tax has now been pushed back to 2026.
The start of 2023 for the lettings market in Norfolk has been very promising. In 2022 the average increase in rental prices across the UK rose by 4.2% with East of England showing a similar rise of 4.1% (Source: Office for National Statistics- Index of Private Housing)
Making Tax Digital for Income Tax pushed back to 2026
Only a few short weeks ago, the government announced that it would push back the planned changes under Making Tax Digital for Income Tax by two years - good news for landlords with self-assessed income. From 6 April 2026, landlords with a property income over £50,000 will need to submit quarterly income tax returns using MTD compatible software - and those in the £30,000-£50,000 income bracket will join them from 6 April 2027.
Changes on the horizon for short-term lets
Governments in England, Scotland, and Wales have taken on board the criticism levelled at the holiday lets sector and its impact on the supply of homes in certain regions.
In England, the criteria for business rate relief for short-term lets will change in April 2023, while homes left empty could be eligible for higher council tax rates.
In Wales, a consultation is open on a licensing scheme and register for holiday lets - until March 2023 - while in Scotland a new licensing scheme has been introduced. Existing owners of properties let out on a short-term basis will need to apply for a licence on each property by 1 April 2023. One would think this direction of travel across the United Kingdom will be aligned in the future.
Energy Price Guarantee to downgrade in March -
The current Energy Price Guarantee aims to save households approximately £900 a year, reducing energy bills to around £2,500 a year on average. A new guarantee will come into play from April 2023 until April 2024, meaning the average household will pay £3,000 a year.
The government has also committed financial support to the most vulnerable households in the UK, including low income households on certain benefits that will receive a payment of £650 to support through 2022-2023 - with a second payment of up to £900 in the 2023-2024 financial year - as outlined at gov.uk.
With the ongoing cost of energy and future planned EPC changes we advise our clients to consider home improvements that increase the homes performance and in result increase the rental potential and desirability.
As always, our teams are on hand to discuss any questions you may have regarding your rental property and feel free to email [email protected] if you need any advice or support.