Budget 2013 | Helping hand or economic suicide?

Budget 2013 | Helping hand or economic suicide?

Yesterday George Osborne delivered his fourth budget, calling his speech “a Budget for people who aspire to work hard and get on” for an “aspiration nation”.

The key points :


  • A new “help-to-buy” scheme will include £3.5bn for shared equity loans, and a government interest-free loan worth 20% of the value of a new build house.


  • Capital gains tax relief for sale of businesses to their employees.
  • Corporation tax will be cut to 20% in April 2015.
  • Small company and main rates of corporation tax will be merged at 20p.


  • The UK economy is forecast to grow by 0.6% in 2013: half the figure announced by George Osborne in December 2012.
  • Growth is then predicted to be 1.8% in 2014, 2.3% in 2015, 2.7% in 2016 and 2.8% in 2017.
  • The UK is predicted to avoid a triple-dip recession.


  • The government will miss its own debt target by two years. Debt is forecast to go on rising for the next five years. It is predicted to be 75.9% of GDP this year, then 79.2%, 82.6% and 85.1%, peaking at 85.6% in 2016-17.


  • Help for Equitable Life policy holders will be extended to those who bought with-profits annuities before 1992, with payments of £5,000 and extra £5,000 for those on lowest incomes.


  • No changes to the rates of income tax
  • The income tax personal allowance will rise to £10,000 in April 2014.


  • The flat rate pension worth £144 a week will be brought forward to 2016.


  • Government borrowing is forecast to be £108bn in 2013-14, falling to £97bn in 2014/15, then £87 billion, £61 billion and £42 billion in following years.


  • The numbers of people in employment is forecast to rise, with 600,000 more jobs expected in 2013 than this time last year.
  • A new Employment Allowance will take the first £2,000 off the employer National Insurance bill of every company in the country.


  • New tax incentives for manufacture of ultra-low emission vehicles.
  • New allowance for the development of shale gas.


  • The planned 3p rise in fuel duty in September has been cancelled.


  • Whitehall department budgets to be cut by 1% after a £11bn underspend this year, with protection for schools, health and overseas aid.
  • In his forthcoming spending review, there will be cuts of £11.5bn, up from previously announced £10bn.


  • The Bank of England will still be required to keep inflation at 2%, but will have a broader remit to work for a stable economy.


  • The public sector pay freeze of 1% has been extended by one year to 2015/16.


  • A total of £3bn of extra money for infrastructure will be made available in 2015/16.


  • Duty on wines, spirits and cider will increase.
  • Beer duty has been cut by 1p.


  • Working families to receive up to £1,200 per child for childcare.
  • A cap on social care costs will come in 2017 and protect savings above £72,000, with the threshold for means tested help raised from £23,000 to £118,000.


  • Money raised from LIBOR banking fines will be used to help combat stress in veterans.

Comments direct from the lettings industry:

Paul Routledge, experienced Landlord and CEO of landlordreferencing.co.uk said:

I can totally understand why they’re doing new builds only, because obviously the Government doesn’t want to be exposed to those who undertake large repairs or the property fails and they then can’t meet the mortgage payments because they have to do work on the house to keep it in habitable order.

Primarily I fear it’s a little too late and that the Government will fail to get the economy back on track and growing again before the next election is due, thus allowing the dark destoryers from the previous era back into our front rooms again. OH DEAR!

If they had only taken our advice and kept watering the tree whilst cutting back the unruly branches; we may not be where we are today.”

The Simply Business Team said:

“While yesterday’s Budget announcement was full of headline-grabbing announcements for homebuyers, there was precious little for the rental sector. There was confusion following the statement regarding whether or not the Help To Buy scheme will be open to landlords. After two clarifications it was made clear that buy-to-let properties will be excluded.

Elements of the Budget are to be welcomed by landlords. A substantial hike in the personal allowance will help to reduce the tax burden, and a further cut in the rate of corporation tax will benefit those landlords who have incorporated. But above all, landlords would benefit from economic stability – and there are few signs that this is on its way. In 2010 the Office for Budgetary Responsibility predicted that the economy would grow in 2013 by 2.9 per cent. Today that prediction was cut to just 0.6 per cent. Plan A is not working.”

Full article: http://www.simplybusiness.co.uk/about-us/blog/march-2013-budget/

Paul PalmerAssociate of the Empty Homes Agency, former Empty Property Officer of Westminster City Council and LRS member – said:

“I like the development of the build to rent budget, I see this as a good way to develop long term rented housing thus providing sustainable long term tenancies. Maybe this will make regulation easier.

Interesting that the old 5 year rule for right to buy has been reduced to 3 years. This will surely lead to more council properties being bought and therefore lost to the social housing system.

On the other hand, a reduced budget to see 15,000 affordable homes build, thus adding to social housing, but remember, affordable housing is only 20% below market, where social housing is at Local Housing Allowance rates.

Interesting to note that Housing Associations will be able to charge tenants who earn more than 60K per year, full market rents? I guess that will help them make some profit. How many social tenants earn more than 60k? And those that do, why are they in social housing?”

Lisa Orme – Managing Director of keys-mortgages.co.uk, lead Mortgage Advisor, with over 10 years experience in the property business and LRS member – said:

“Should everything come to pass yesterday’s budget could well provide the boost our economy needs as the main focus was on small businesses and property. 

Small business owners will benefit from lower NI, lower corporation tax and Directors and employees alike will benefit from the increased income tax threshold. Small businesses are the lifeblood of our economy and are the big businesses of the future so support in this area is always welcome. 

The mortgage guarantee schemes sounds very interesting indeed though the devil is in the detail and we will have to wait and see how lenders and then homebuyers react but on the face of it its potentially a return to MIGs of the past and could go a long way to regenerating the housing and property development markets. 

There will no doubt be the naysayers who think the housing market has been artificially supported for too long already etc but like it or not most people psychologically associate their personal wealth with the value of their home and unless confidence returns in this area we will remain in the doldrums. Added to which the construction industry is a major employer spreading across many other sectors and is vital to our economy. 

The most interesting aspect to the budget was the Government’s suggestion that they would change or temporarily lift the inflation target and put in place a ‘guarantee’ that interest rates would not move for a certain period of time. The issue being that people and businesses will not invest, buy or move while they are worried about rate rises and some certainty in this area will encourage people to make decisions. This has been done in the US and the positive impact is being seen there so it stands to reason the same could happen here. 

Savers will no doubt despair but saving doesn’t get an economy moving I’m afraid and we will ALL suffer until that changes.

As a mortgage adviser, a small business owner, an employer and a property investor I’m excited by what the budget holds in store. But let’s see what pans out – a year is a long time in politics!”

As a private renting landlord, letting agent or tenant what are your views on the Budget 2013?

Please share them with the Landlord Referencing Community.

Author: Media Team

Keeping you up to date with all the most important changes, all the most interesting gossip and all the big news in the Private Rented Sector.

Website: http://www.landlordreferencing.co.uk

Comments are disabled.