Keep Calm and Carry On. Some Post-Budget Reassurance from Brighton Homes
As people say, time flies and a week is a long time in politics.
And so it has proved.
Now that the dust has settled around the Budget, attention has started to move elsewhere: 5,000 miles over the Atlantic, in fact, and the likely fall-out across the world.
But financial matters at home are still on our minds.
Our Budget Review - With a Different Focus
In this article, we’re returning to the recent Budget, and what it may mean for you as a landlord.
However, we’re not necessarily focusing on the “obvious” tax and financial issues, as they’ve been rigorously discussed by all and sundry. And yes, we recognise that owning and renting property is not as simple or straightforward as it used to be – for many reasons. In our opinion, Brighton and its surrounding areas are still great locations to invest in, and we’d be pleased to offer you the benefit of our long-standing experience should you be considering engaging Brighton Homes to market and rent your property.
This article concerns National Insurance.
Or rather, the NI that employers pay HMRC on behalf of their employees. This may affect you, and we’ll explain how, and why.
As you know, it’s been increased, which for many businesses could be challenging, not least within the rental agency sector. Of course, we are one of those companies affected by this development. But, as an agency with robust high standards and one that does everything “by the book”, we need to reassure you that as a client of ours, it really is business as usual.
Let’s recap the Budget headlines and then drill down to the NI issue and present what we mean.
Where We Are
Every Budget is hotly anticipated, but in recent history, almost no fiscal statement has attracted quite as much attention, debate and conjecture before it was due to take place. Weeks beforehand, economists predicted drastic action. Plus, there were the usual leaks. What was to be done about the rather large “hole” in the nation’s finances?
The Chancellor was compelled to unveil several significant tax changes to promote economic growth and plug the gap – which she did in one fell swoop, with plans to raise £40 billion.
The Headlines:
·Capital gains tax rises: from 10% to 18% for basic rate, and 20% to 24% for higher rate taxpayers.
·Fuel duty frozen.
·1p of the price of a pint in the pub (so don’t go too mad).
·Inheritance tax changes for farmers.
The national living wage will increase to £12.21 per hour for those over 21, and for 18-20-year-olds, it will rise to £10.00.
A big change is coming regarding the National Insurance contributions employers pay directly to the government. Businesses are being asked to contribute more to the Treasury’s coffers, with a rise of 1.2 per cent to 15 per cent from April 2025.
Rachel Reeves is also lowering the threshold at which companies start to pay NI on an employee’s salary from £9,100 per year to £5,000. In other words, organisations with staff will have to pay more money to HMRC at an earlier stage.
This development is set to raise £25 billion per year, which is quite a chunk of money by anyone's standards.
(Very small businesses will be exempt under changes to the employment allowance, however, which is rising from £5,000 to £10,500.)
Why Does This Increase Matter to You as a Landlord?
Well, the answer is relatively simple:
It may not be the best news for most businesses and some rental agencies. Why?
Because ultimately, in our opinion, it could compromise the service levels they offer you.
With higher employee costs, there could be a knock-on effect for hiring and growth plans, a hold on wage increases and, as a result, more work being done by fewer people. This sounds brutal: some bosses may even be tempted to try cutting salaries, or there may be redundancies and layoffs. Ambitions for strategic business development, whatever that looks like, could be set aside for some time.
The result: with more costs involved, you may find your fees going up.
There’s something else to be aware of: naturally, all businesses exist to generate a profit. With costs squeezed, there may be a compromise on advertising and marketing your property. Less visibility means it’s less likely that the kind of people who need to see their future new homes will do so. A missed opportunity. You’re paying the same fees but not receiving what you were promised.
Above all, labour-intensive businesses – and to be fair, this is most certainly a “busy” sector – may suffer.
Everyone could feel the Autumn Budget's effect, like ripples from a stone thrown into a pond. Is there a solution? As a landlord, it’s worth asking yourself:
Are You With The Right Agency?
If you’re concerned about this issue, let us reassure you:
We plan to continue supporting our landlords and tenants without increasing costs or fees. Brighton Homes will have the same number of qualified staff who, although hardworking and fully occupied, will continue to offer you the same, as-usual, high responsiveness and customer service standards.
Our team turnover rate is virtually zero, and as most of our employees are landlords themselves, they relate entirely to your situation. Equally, this personal experience gives them the edge: they’re likely to be one step ahead of any issues or challenges that arise – with proactive solutions to make everything work as smoothly as possible.
Making the change isn’t complicated.
In fact, it’s easy.
Just call us on 01273 672 333 or email us through this website, and we’ll do most, if not all, of the work for you.
Brighton Homes isn’t cutting costs. Or corners. But we ARE cutting out the stress and hassle that being a landlord trying to do everything can bring – not least in these demanding times