Spring Budget 2021 for Property: Stamp Duty, Corporation Tax & More

By Jonathan Daines

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Chancellor’s Spring Budget 2021 – How Does It Affect The Property Market and PRS?

This post was last updated on April 6th, 2021 at 12:04 pm

On the 3rd March, Chancellor Rishi Sunak announced the Spring Budget for 2021. The Budget unveiled the government’s tax and spending plans for the year ahead, including a series of measures to support businesses through the pandemic and assist the UK’s long-term economic recovery.

Among these plans are tax changes, extensions to Stamp Duty and new mortgage schemes – but how will these measures affect landlords and the wider property sector?

Spring Budget – Stamp Duty Holiday Extension

Rishi Sunak announced that the Stamp Duty Holiday – initially introduced in July 2020 – will be extended for another three months. During this time, first-time buyers and those replacing their residential properties will pay no Stamp Duty below £500,000.

The Spring Budget also noted that Stamp Duty rates will not go back to ‘normal’ until 1st October 2021. Instead, there will be a interim period from July to September where the threshold is lowered to £250,000. After this point, stamp duty rates will return to their original thresholds.

Many landlords were unphased by the Stamp Duty Holiday back in July. In a survey carried out by LettingaProperty.com, only 13% of landlords reported that the changes had encouraged them to buy more property – with the majority (75%) not feeling affected by it at all.

One landlord felt that “it hasn’t been made clear what Stamp Duty landlords still have to pay”, whilst another considered the changes to be “great for residential purchases but it doesn’t make any difference for buy to let”.

Read more: Landlord Stamp Duty Holiday Extension: How Does The Stamp Duty Holiday Affect Buy-To-Lets?

How can landlords benefit from Stamp Duty Holiday?

Although the primary focus has been on first-time buyers, landlords and property investors can benefit from the Stamp Duty Holiday and the extension announced in the Spring Budget 2021.

Before July 8th 2020, buy-to-let Stamp Duty rates were as follows:

  • 3% up to £125,000
  • 5% between £125,001 and £250,000
  • 8% between £250,001 and £925,000
  • 13% between £925,001 and £1.5 million
  • 15% above £1.5 million

So, if you purchased a £500,000 buy-to-let property before the Stamp Duty changes took place, you would have paid £30,000 (3% of £125,000, 5% of the next £125,000 and 8% of the remaining £250,000).

Until 1st July 2021, landlords and property investors are only required to pay a 3% flat-out fee up to the raised threshold of £500,000. So, instead of paying £30,000 in Stamp Duty on a £500,000 property – you would only pay £15,000.

After 1st July and until 30th September 2021, this threshold will be lowered to £250,000. Landlords can still benefit from this ‘interim’ period. For example, if you purchase a buy-to-let at £250,000 between these dates you would pay a 3% stamp duty fee of £7,500.

However, if you purchased this same property on 1st October 2021 (when stamp duty rates go back to normal) your stamp duty charges would be £10,000 (3% of the first £125,000 then 5% of the remaining £125,000).

Buy-to-let property purchases above £500,000 will also be subject to additional Stamp Duty rates. Here’s a quick break down of the brackets:

  • 3% up to £500,000
  • 8% between £500,001 and £925,000
  • 13% between £925,001 and £1.5 million
  • 15% above £1.5 million

Find out how much Stamp Duty you would pay (and how much you would save compared to normal rates) with our Buy-to-Let Stamp Duty Calculator.

Buy-to-let Stamp Duty Calculator




Spring Budget – Reintroduction of 95% mortgages

The Spring Budget also revealed that 95% mortgages will become available from April 2021.

When the pandemic first hit the UK, many mortgage lenders retracted their 95% mortgage offers to reduce their exposure. Now, buyers will have the chance to get on the property ladder with a smaller deposit amount.

The mortgage scheme is thought to be the “successor” of the previous Help to Buy scheme and will be available until 2023. It will apply to properties up to £600,000 – but is likely to be unavailable for investment purchases.

Rightmove have calculated that the loans will cover 86% of properties for sale in the UK, however, rising house prices will still see buyers scraping together a hefty deposit sum.

Prime Minister Boris Johnson hopes the scheme will help renters buy their own properties, stating: “I want generation rent to become generation buy and these 95 per cent mortgage guarantees help to deliver this promise”.

Mark Hayward, Chief Policy Adviser at Propertymark, has also commented “A government-backed mortgage guarantee scheme will help first-time buyers get on the housing ladder at a time when for many owning a home seems an impossible dream“.

Read more: 11 Things Landlords Can Expect from 2021

Corporation tax increases

Incorporated landlords and letting agencies will face a significant corporation tax increase in 2023.

The chancellor has announced that corporation tax will remain at 19% for now, but will be increased to 25% in April 2023.

Sunak explained that this tax increase was part of the government’s plan to get borrowing “back under control” and position the economy to face the next crisis.

A new “small profits rate” will maintain the 19% rate for firms with profits of £50,000 or less, meaning around 70% of companies (1.4 million businesses) will be “completely unaffected” by the tax hike. Beyond this, there will be a tapered increase of corporation tax up to 25% for profits from £50,000 to £250,000, and then a flat rate of 25% for £250,000 and above.

The chancellor commented, “I know the British people don’t like tax rises but I also know they dislike dishonesty even more”.

What other changes can landlords expect from 2021?

Mandatory electrical inspections

From April 1st 2021, all rental properties in England must have an electrical inspection and valid EICR.

This requirement falls under The Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020 brought in last year. In July 2020, all rental properties with new tenancies required an EICR. From April 2021, this will be extended to all tenancies – new and existing.

Find out more and join in the conversation on our main article: Mandatory Electrical Safety Inspections (EICRs) for Rental Property 2021.

Book your electrical inspection to comply with the regulations.

New debt respite scheme

The government are introducing a new scheme to help those struggling to repay their debts – including rent arrears.

The Debt Respite Scheme will give those with debt problems the chance to seek professional advice and find a sustainable solution to their issues with a 60-day ‘breathing space’. This gives protections from creditors and will pause enforcement action during this time.

The scheme will be launching on 4th May 2021 and will work on an application basis. In order for a tenant to be eligible for a ‘breathing space’, they must not already have a debt relief order, an involuntary arrangement, or be an undischarged bankrupt at the time they apply.

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Housing Health and Safety Rating System Review

The Ministry of Housing, Communities and Local Government have launched a review of the current Housing Health and Safety Rating System (HHSRS).

The HHSRS is a risk assessment tool used by local authorities to determine whether a property is safe to live in. It was first developed in the 1990s and has been used for around 15 years – but building technology and knowledge of hazards have advanced since.

The two-year project will also include a review of assessor training and minimum safety standards. The government gathered feedback from landlords and tenants in March, but no further updates have been released.

Got some thoughts to share regarding these government updates? Join the conversation below.

About Jonathan Daines

AvatarAs Founder and CEO since 2008, Jonathan’s passion for property, technology and entrepreneurship inspired the creation and innovation of LettingaProperty.com. With the support of a dedicated team of industry professionals, for the past 11 years he has built a digital marketplace offering low-cost services that empowers landlords and tenants to let and rent property with ease.

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