Fewer Rate Cuts, Slower Growth: What Rachel Reeves’ Spring Statement Means for Landlords
Rachel Reeves’ first Spring Statement as Chancellor comes at a time of economic uncertainty, both globally and at home. For landlords, the message is clear: brace for a prolonged period of high interest rates, modest economic growth and more regulatory oversight.
The Office for Budget Responsibility (OBR) has significantly downgraded the UK’s economic outlook since the Autumn Statement. With the growth forecast halved to just 1%, and inflation not expected to return to the Bank of England’s 2% target until 2027, landlords are facing a more expensive borrowing environment and continued market volatility.
Economic Outlook: Slower Growth, Sticky Inflation
Reeves acknowledged the turbulent global backdrop, stating: “Global economic uncertainty has increased sharply, growth has slowed in many of Britain’s major trading partners, and borrowing costs have risen across most advanced economies. As an open trading economy, the UK is not immune to these challenges.”
The OBR now expects UK GDP growth of just 1%, a stark revision from previous forecasts. Inflation, meanwhile, is proving more persistent than expected, with the Bank of England’s target unlikely to be met until 2027. This means interest rates are likely to remain elevated in the near term.
Interest Rates and Borrowing Costs
With the base rate currently at 4.5% and the average two-year fixed mortgage sitting around 5.3%, landlords are feeling the squeeze. For those with variable-rate mortgages or approaching re-mortgage deadlines, higher repayments will continue to eat into yields. Stress-testing new buy-to-let investments becomes more difficult, especially in regions where rental growth isn’t keeping pace with inflation.
Housebuilding: Bold Promises
One of the few positives for the property market was the announcement of £2bn in funding for social and affordable housing. This is in addition to Labour’s broader pledge to deliver 1.5 million new homes over the next five years.
While this signals a welcome commitment to addressing the UK’s chronic housing shortage, delivery remains the key concern. The sector has heard similar promises before and developers will be watching closely to see whether this translates into meaningful action.
Tax Changes: What Landlords Need to Know
While there were no broad tax increases, there were several targeted measures which will impact landlords and property investors directly. Key changes include:
-
NICs increasing to 15% (up from 13.8%) from April 2025
-
Business Asset Disposal Relief will see its rate rise to 14%
-
The non-dom regime abolished and replaced with a new residency-based system
-
Furnished Holiday Lettings (FHL) tax relief scrapped from April 2025
The abolition of FHL relief is particularly notable, as it removes a valuable incentive for landlords letting short-term or seasonal accommodation. This may lead to a shift in strategy for landlords operating in holiday hotspots, who could now pivot toward longer-term tenants.
Making Tax Digital: New Rules for Landlords
From April 2026 (delayed from the original 2024 timeline), landlords and sole traders with an annual income above £50,000 will be required to:
-
Maintain digital records
-
Submit quarterly updates to HMRC via approved software
This marks a significant shift in how property income is reported and will require many landlords to adopt digital accounting tools — and potentially seek professional support to stay compliant.
For landlords, the Spring Statement brings a potentially cautious year ahead. Sluggish economic growth, persistent inflation and high interest rates will continue to pressure margins, while upcoming tax reforms and digital reporting rules demand sharper financial oversight. While investment in housing may provide long-term opportunities, short-term challenges are likely to define the landscape. Staying agile, informed, and compliant will be crucial as the market adapts to a slower, more regulated environment.
Recent Comments