Autumn Statement reaction round up: Part Three

Autumn Statement: the final piece in the new homes jigsaw

John Adams, head of planning at Deloitte Real Estate, comments on the direct commissioning of new homes announced in today’s Autumn Statement:

“The announcement of ‘direct commissioning’ of new homes in the Government’s pilot project at Northstowe could be the final piece in the jigsaw for delivering the annual requirement of 230,000 homes.”

“The National Planning Policy Framework established the presumption in favour of sustainable development and required local authorities to demonstrate a five year housing land supply. The new homes bonus and loans to housebuilders from the Getting Britain Building and Home Start programmes provided fiscal incentives to local authorities.”

“We are now seeing the direct commissioning of new homes. Targeting public sector owned land will address delays caused by a combination of the planning process and viability issues on many privately owned sites. A key advantage will be the ability of the Government, and the Homes and Communities Agency, to take a longer term view on the returns from major developments, including land value. This will speed up the delivery of housing, including affordable homes.”

“Direct commissioning could also support the delivery of new garden communities, such as Bicester, which will be well placed to absorb demand for homes from cities with growing economies.”

Redrow Homes comment on the Stamp Duty changes

John Tutte, Group chief executive of Redrow Homes, regarding the changes to the stamp duty system announced by The Chancellor yesterday, commented:

“We welcome the reform of the stamp duty system, which will make buying a new home more affordable for many of our customers. It’s a change we’ve called for previously on numerous occasions and the new system will be much fairer for the vast majority of homebuyers than the previous tiered approach. For those buying a home around the average UK price of £275,000, savings of £4,500 compared to the old system will make a huge difference, potentially enabling them to put down a larger deposit and secure a better mortgage rate. Together with the Government’s continued commitment to the Help to Buy equity loan scheme it’s another step in the right direction to help more people to get on to or move up the property ladder.”

Autumn Statement: SDLT reform could sound the death knell for Mansion Tax

The British Property Federation (BPF) comments on how the SDLT reform announced today in the Autumn Statement will affect the property market.

Liz Peace, Chief Executive of the British Property Federation, said:

“The SDLT system has been in desperate need of reform. It currently provides such a disincentive to move and leads to a large number of homeowners extending upwards, downwards and outwards. This will help to free up the market and get people moving into the homes that they want. We are pleased to see other reliefs remain, such as for multiple dwellings, which is very important to the build-to-rent investment sector. Some issues however remain, and we look forward to working through these with officials in the coming weeks.”

“A little bit more notice would have been helpful as the sector will have to get to grips with the changes by tonight. There will be people paying a lot more SDLT at the top end of house prices and the rapid speed of implementation no doubt reflect any rapid moves to avoid paying. With high value homes paying far more this will hopefully be the death-knell for any more talk of mansion taxes.”

Autumn Statement review: property industry welcomes rates review, SDLT reform and boost to regeneration

Responding to the Autumn Statement today, British Property Federation Chief Executive Liz Peace said:

“This Autumn Statement lays the ground for the property industry to further increase the vital role it plays in driving economic growth, supporting businesses and delivering homes. We are therefore delighted that the Chancellor has listened to the property industry and, within the budgetary constraints he has set himself, has supported our calls to help unlock greater investment in our towns and cities.”

Among a series of wins for the property industry, the Chancellor today announced:

  • A ‘structural review’ of business rates to look at how they system can respond better to a modern economy whilst continuing to fund local public services; alongside a 2% cap on rates, the doubling of Small Business Rate Relief and a £1,500 discount for small retail and leisure properties,
  • Reform of the economically distortive SDLT ‘slab’ structure for residential purchases,
  • A commitment to simplify the administrative burden of the Annual Tax on Enveloped Dwellings for companies that are eligible for a relief,
  • Relief from SDLT for investors transferring portfolios in to property authorised investment funds (PAIFs) and co-ownership authorised contractual schemes (CoACSs) and changes to the SDLT treatment of CoACSs investing in property so that SDLT does not arise on transactions,
  • A review of Compulsory Purchase Orders designed to make assembling regeneration sites easier, as well as reforms to encourage quicker negotiation of section 106 agreements and a renewed focus on the speed at which local authorities deal with planning applications,
  • An additional £1bn to be invested over four years in GP services – including new primary care facilities.

However, the BPF expressed disappointment that the Chancellor’s made no mention of his commitment to review the Carbon Reduction Commitment Energy Efficiency Scheme in 2016, or an announcement on the future trajectory of Minimum Energy Efficiency Standards, something that will be vital to provide greater certainty to long-term investors.

Liz Peace said:

“The structural review of business rates is a hugely welcome, if belated, announcement. Creating a business rates system fit for the 21st century will be one of the central challenges facing the next Parliament, and we will continue to work with all parties to ensure the fairest possible settlement for rate-payers across the country, and all sectors of the economy.”

“Investors in homes will be heartened by the introduction of SDLT seeding relief for PAIFs and CoACSs, and plans to simplify the administrative burden of ATED for companies that are eligible for a relief. Similarly, the long overdue reform of the ‘slab’ system of SDLT will be a boon to the housing market and the wider economy. With high value homes paying far more this will hopefully be the death-knell for any more talk of mansion taxes.”

“Measures to boost investment in infrastructure are also to be applauded, particularly the commitment to invest in the country’s healthcare estate – something that will be vital if the NHS is to meet the challenges of the 21st century – and a renewed focus on stripping unnecessary delays out of the planning system that, if matched by a commitment to delivery on the ground, should greatly enhance the prospects for urban development.”

CIPHE: Positive news for the industry

From April 2016 the government will make it cheaper for employers to take on an apprentice by abolishing employer National Insurance contributions for apprentices aged under 25.

Kevin Wellman, Chief Executive Officer for the Chartered Institute of Plumbing and Heating Engineering (CIPHE), has responded to the news, which was announced in the Autumn Statement by George Osborne.

“Clearly, this is going to be very beneficial for employers and apprentices. When you look at the savings an employer will make over a three-year period, it’s quite substantial. It will also encourage more employers who were doubtful about taking on an apprentice to take that first step.”

“On top of this, the £20m budget to improve careers advice will help students to make the right decision on their career path. The CIPHE is an educational charity, as well as being the professional body for the industry. We believe Apprenticeships are key in creating a competent, professional workforce for the future.”

United Trust Bank: The end of the Mansion Tax or the first of a double hit on wealthier home owners?

Noel Meredith, Executive Director of United Trust Bank comments on changes to the Stamp Duty Land Tax announced in the chancellor’s Autumn Statement.

“The majority of homebuyers will welcome this news as the new Stamp Duty Land Tax (SDLT) structure will lower the cost of house purchase for most people. However, developers will have mixed views.”

“According to the Land Registry the average house price in England and Wales is just over £177,000 and someone buying at this price will be £730.00 better off under the new charging structure than with the old one. Even in London, where the average house price is just over £460,000, buyers will be £800 better off on a purchase at that price. In fact you’d have to be buying at over £937,500 for the new structure to have a detrimental effect.”

“The most beneficial change comes from the removal of the ‘slab’ approach to calculating SDLT where an increasing percentage was charged on the whole amount once certain thresholds were reached. This had the effect of builders pricing at just under the thresholds or pricing well above. For example, the SDLT levied on a property at £501,000 was £20,040 compared to £14,970 on a property priced at £499,000. The new structure removes the need for pricing to be influenced by the SDLT thresholds.”

“Those who will suffer most from this change are the wealthier buyers and the high end developers serving that market. Someone buying a new home at £3.5m will pay an extra £88,750 in SDLT under the new regime and this will be a further burden to some developers already challenged by non-committal buyers uncertain about the possible imposition of a Mansion Tax. I expect agents and developers to be busy handling price renegotiations from those buyers unwilling or unable to find these extra sums. In the worst cases sellers will lose sales or they will have to agree a lower price, effectively footing the extra SDLT bill on their buyers’ behalf.”

“Developers welcome changes that stimulate demand or make purchasing easier. However developers also pay SDLT when they acquire sites and even sites for relatively modest numbers of new houses can cost millions of pounds. For more expensive sites this will create higher costs for many developers which will have to be paid for in the form of higher house prices or land owners will have to accept less for their development land. I expect negotiations for land to become more complex and time consuming and in the short term supply may be constrained which will do nothing for the delivery of new homes! In the longer term the market will have to adjust.”

“Governments seem to think that house building is a source of easy revenue. SDLT paid on site purchases, community investment levies, Section 106 costs, the provision of affordable housing etc. these are all means by which developers are squeezed. The Government then gets another slice of tax from purchasers as the houses are sold. With so many costs and complications associated with house building it’s no wonder we don’t produce the volume of new homes we need.”

“The changes to SDLT will undoubtedly add more fuel to the debate about the taxation of higher value properties. Initially this might have been interpreted as the Government’s answer to a Mansion Tax but it could actually be the first of a double hit on wealthier home owners. The Labour party has supported these changes to SDLT but appear to still want an annual ‘Mansion Tax’ on top. So whilst these changes are good news for most home buyers, they could make an already softening market even more challenging for high end developers.”