The not so mini budget 

It was labelled as a mini-Budget, but Chancellor Kwasi Kwarteng’s first fiscal address ended up being anything but mini, causing a political and economic earthquake that is still rippling now.


But what did we learn from a housing perspective? And, specifically, a lettings one?

Stamp duty cut

In one of the most significant tax-cutting budgets for many generations, Kwarteng announced that the threshold at which buyers would pay stamp duty on homes in England and Northern Ireland would be increased, thereby reducing the amount of tax owed when purchasing a home. The Chancellor said this would remove around 200,000 people from paying stamp duty altogether.

The threshold at which buyers start to pay stamp duty – known as the nil-rate tax threshold – was increased from £125,000 to £250,000.

Meanwhile, the nil-rate threshold for first-time buyers was increased from £300,000 to £425,000, while the maximum amount that an individual can pay while remaining eligible for first-time buyers’ relief rose to £625,000.

The Government said the measure means that all individuals buying residential property on or after 23 September 2022 will pay less or no stamp duty.

The cut applies to additional purchasers (including landlords), although the extra 3% surcharge on second homes remains. It’s been predicted that landlords will save around £2,500 when purchasing a new home under the new rules, although some have said this won’t be enough incentive to keep landlords in the market. Others have suggested the approach by Liz Truss and her Chancellor could impact the viability of buy-to-let, rendering the stamp duty savings relatively meaningless.


There has been much debate about the merits or otherwise of the stamp duty cut since the announcement, but this article does an excellent job of setting out its possible impact on the housing market. 


Landlords are likely to welcome any tax savings they can get, given the tax disincentives they have faced in recent years. In contrast, tenants who have aspirations of buying will potentially be able to buy a higher-priced home without facing any stamp duty. Letting agents, meanwhile, could find they have more business if the cut incentivises more landlords to invest or grow their portfolios.

Cut to the top rate of tax ..... Then scrapped

Recently, the Government has performed a U-turn on its plans to cut the top 45% income tax rate, which it said was put forward to stimulate growth and ‘energise the economy’, after a fierce backlash from its MPs, amongst many others.


Its original plan was to scrap the top 45p income tax rate on earnings of more than £150,000 a year, leaving the highest rate at 40p, with the Treasury admitting after the mini-Budget that approximately 660,000 of the highest earners would benefit from the scrapping of the 45p rate, recouping on average £10,000 a year.


Many who fall in this highest earning bracket – including landlords – were against such a move during a cost-of-living crisis.


While the Chancellor said the aim was to grow the economy so everyone could benefit, and Liz Truss has said the plans were to make the UK more competitive, the Government has now U-turned on this controversial pledge after saying it had listened to the feedback of the country. 

Mortgage and interest rates uncertainty

One of the unintended consequences of the mini-Budget, which spooked the markets and saw the pound’s value fall drastically, has been chaos in the mortgage market and talk of the Bank of England needing to raise interest rates to 6% in emergency intervention.


In the days after the Budget, thousands of mortgage products were taken off the market as the threat of an interest rate rise loomed, including many buy-to-let products. Lenders have started to return to the market now that the situation with the economy has calmed somewhat. Still, some uncertainty remains over the prospect of further interest rate rises, while mortgages may be more difficult for landlords to come by for the moment.


That said, the market for buy-to-let products has been very competitive in recent years, so lenders are likely to be eager to cater to this market as much as they can, as soon as they possibly can. 

What next?

There has been a lack of clarity over when the Government’s fiscal plan – setting out its medium-term strategy for the economy to try and reassure the markets – will take place.

The original date had been set at 23 November, but because of recent events, there had been talk that the event could be brought forward to steady the markets sooner. However, Kwarteng and Truss have both insisted the fiscal plan will be set out on 23 November as initially planned.


The publication of the plans will come alongside economic forecasts from the Office for Budget Responsibility (OBR), the government’s fiscal watchdog, something which didn’t happen with the mini-Budget and some say was the main reason why the markets got so jittery.


It’s certainly rare for a fiscal event to have such a seismic impact on the whole country, but those operating in the lettings sector will hope the November event will make things a lot clearer and provide more of a stable long-term outlook for mortgages and interest rates.


Since the publication of this article, the Government has revealed that it will bring forward the date of Kwasi Kwarteng’s medium-term fiscal plan to October 31