Ten property takeaways from the Budget

BUDGET 17: Housing was last but not least on chancellor Philip Hammond’s agenda in a Budget delivered amid a large downgrading of the UK’s growth forecast. GDP was revised down by the Office for Budget Responsibility to 1.5% in 2017, 1.4% in 2018 and 1.3% in 2019, before increasing to 1.5% in 2020. The chancellor reaffirmed “a pledge of fiscal responsibility” amid the downgrade, but said he will “use some of the headroom” established in this year’s Spring Budget to invest. However, Hammond also delivered a bumper package of investment in housing and infrastructure, important reforms to business rates and significant new devolution commitments: 1.Capital Gains tax shock: The Treasury is planning to scrap capital gains tax exemption for overseas investors on commercial property, in a move that is feared will cool the market. The tax change, which will be effective from 1 April 2019, represents “the biggest change to the taxation of commercial property in the UK since the SDLT in 2003,” according to Deloitte. The tax will affect any gains accruing after 1 April 2019, so investors will be taxed  on the increase of the value of their property after that date. 2. Stamp Duty – SDLT will be abolished for first-time buyers on new homes up to the value of £300,000. In London, it will be abolished on the first £300,000 of properties bought by first-time buyers up the value of £500,000. 3. Housing investment – £44bn of capital funding, loans and guarantees will be provided over the next five years to supply skills, resources and building land to build 300,000 homes a year by 2020. This will include the doubling of the Housing Infrastructure Fund to £2.7bn, a £400m estate regeneration investment, £1.1bn to unlock strategic sites, and £8bn of new financial guarantees to support private housebuilders and the PRS. A national retraining scheme will be created with the Confederation of British Industry to support the expansion of construction and digital skills, and an additional £34m was pledged to develop construction skills across the country. 4. Land banking review – The Budget failed to take specific measures against land banking, but a new “urgent review” has been established, headed up by West Dorset MP Oliver Letwin. It will report in time for the Spring Statement next year, and if land is being held for commercial reasons it will lead to direct intervention. 5. Empty properties – New legislation will give local authorities the power to charge a 100% council tax premium on empty properties. 6. Infrastructure investment – Hammond appeared to respond to the outrage about disparity of investment between the North and South of England, with £1.7bn announced for the Transforming Cities Fund for the Northern Powerhouse and Midlands Engine. Half of the investment will go to the six devolved combined authorities for local transport priorities; areas without devolution deals will have to compete for the other 50% of the funding. A further £300m was announced for HS2 investment, and the chancellor referred to consultations with Transport for London about the future of Crossrail 2. Some £1bn of discounted lending will be made available to local authorities across the country to support infrastructure projects. 7. Devolution – A second devolution deal was announced for the West Midlands and a new devolution deal was announced for the North of Tyne. Hammond said government would open negotiations for a Belfast city deal and consult with local authorities about further devolution deals in Northern Ireland. Hammond said the government would back the National Infrastructure Commission’s vision, revealed last week, to commit to building up to 1m homes by 2050, as well as road and infrastructure investment. A new housing deal with Oxfordshire will also deliver 100,000 homes by 2031. 8. Business rates – The chancellor confirmed he would bring forward the planned switch from RPI to CPI by two years to April 2018, which he says will save businesses £2.3bn over the next five years. He also said the period between rate revaluations would be reduced from five years to three years from the next full revaluation. In London, a 100% business rates retention pilot will start next year.  9. HCA reform – The Homes and Communities Agency will expand to become Homes England, bringing together money, expertise and compulsory purchase powers to build homes where they are most needed. 10. Homelessness taskforce – Hammond announced the creation of a new homelessness task force with an initial £28m for three pilots in Liverpool, the West Midlands and Greater Manchester. Click here for all the news, data and analysis affecting real estate in the Budget To send feedback, e-mail Louisa.Clarence-Smith@egi.co.uk or tweet @LouisaClarence or @estatesgazette, or e-mail alex.peace@egi.co.uk or tweet @egalexpeace or @estatesgazette Pic credit: WestEnd61/REX/Shutterstock