The Autumn Statement 2016: key headlines for the property sector
The Chancellor of the Exchequer, Philip Hammond announced his first Autumn Statement to Parliament today and the first statement following the summer Brexit vote. Below we outline some of the key announcements that will affect the property sector:
Housing in the Autumn Statement
There was no reversal of stamp duty charges for second homes or on cuts to mortgage tax relief, as hoped by landlord but new spending on housing projects totaling £3.7bn in England was announced.
A new £2.3 billion Housing Infrastructure Fund was announced, to deliver infrastructure for up to 100,000 new homes in areas of high demand. The chancellor said the money would support the building of up to 100,000 new homes, and amounted to a “step-change” in help for the industry.
A further £1.4 billion to deliver 40,000 additional affordable homes and the relaxation of restrictions on government grants to allow a wider range of housing-types was also announced.
Local authorities will be able to bid for the money under one of three existing schemes : Affordable Rent, Shared Ownership or Rent to Buy.
In addition, the Chancellor announced a large-scale regional pilot of Right to Buy for Housing Association tenants and continued support for home ownership through the Help to Buy: Equity Loan scheme and the Help to Buy ISA.
As always the devil will be in the detail, and it will be interesting to discover how the mechanisms of these new funds will work when introduced.
Business Rates in the Autumn Statement
Business Rates was only mentioned in passing a few times in the Autumn Statement, including the introduction of 100% business rates relief for a five year period on new fibre infrastructure and increasing Rural Rate Relief to 100%.
Aside from confirmation that the Government will push ahead with its unpopular £6.7bn planned changes to business rates, the most significant announcement to business rates was that the transitional relief cap will be lowered from 45% next year to 43%, and from 50% to 32% the year after. This may not sound like a big deal, but it is. Transitional relief will limit the amount rates bills will rise or fall at revaluation on 1 April 2017. Transitional relief brings some good news if you are faced with a large hike in business rates, but bad news if you are expecting a large reduction, as these will be gradually phased in over five years.
The Government quietly published its response to its consultation on the transitional arrangements for the 2017 business rates revaluation today. The arrangements for transitional relief are below and the full document can be accessed here
|Final: Transitional Arrangements 2017 revaluation (before inflation) funded by three caps on reductions|
Note: these are year on year caps on increases. For instance, the maximum increase for small properties over five years would be 64%. But a small property with an increase of 7% would reach their full bill in year two. Medium is above £28,000 rateable value in London and £20,000 elsewhere. Large above £100,000 rateable value
Letting Fees in the Autumn Statement
The Chancellor announced a ban on upfront fees charged by letting agents in England “as soon as possible”, claiming this is to improve competition in the private rental market and give renters greater clarity and control over what they will pay. This will not happen immediately as the Department for Communities and Local Government (DCLG) will consult ahead of bringing forward legislation.
Full details of all of the Autumn Statement can be accessed on the Government’s dedicated webpage at www.gov.uk/government/topical-events/autumn-statement-2016