The major narrative of the Budget was on the much-heralded ‘end of austerity’ (or not, depending on one’s political allegiances), but in the event there was much else to focus on, not least in the property sector.
Chancellor Philip Hammond made important announcements regarding stamp duty, help-to-buy, capital gains tax, government partnerships with housing associations, town centre development, transport infrastructure plans that will help facilitate the construction of new homes and an announcement that the government will respond in the new year to a new report by former minister Oliver Letwin MP on housing build-out rates and how to speed them up.
In this article Experience Invest takes a look at how the 2018 autumn Budget will affect the property sector.
Mr Hammond used his speech to allude to the fact that 121,000 first-time buyers had avoided stamp duty since the last Budget, thanks to the exemption they had been given.
This is now being extended to all first-time buyers of shared properties worth up to £500,000, with this being backdated to give a rebate to any first-time buyer purchasing such a home since the last Budget.
In addition, first-time buyers will be able to benefit from help-to-buy for longer, as it will now be extended until 2023.
Of course, for first-time buyers to get on the ladder will not just need a few tax breaks or a bit of financial assistance, as more homes will be needed to begin with.
The Letwin report response awaits
While a raft of new government housing policies have been announced in the last two years, concerns have been raised over the rate at which homes are actually delivered on sites where planning permission exists.
Mr Hammond’s comments about the response to the Letwin report have provided a rough date for policy announcements on the subject, if not the actual detail.
However, a couple of new measures will have an effect on the provision of new homes.
A boost for town centre residential schemes
The decline of town centres and high streets has been a major issue on which Mr Hammond has commented before, not least as he set out plans for a new tax on large digital retailers, who have taken so much trade away from Britain’s physical stores.
He announced that there would be £675 million for councils to develop high streets, including turning empty shops into homes. This may be particularly useful to councils hoping to use town centre living as a means of regeneration and may provide new opportunities for investors.
Moreover, the chancellor said the government will consult on how to make the process of converting commercial premises into new homes easier.
Funding to build new homes
A programme that may help build more new homes is the Housing Infrastructure Fund. Mr Hammond said another £500 million would be spent on this, which will “unlock 650,000 homes”.
Key elements of this would include more funding for road and rail connections spanning the area between Oxford and Cambridge. This region has been an area of focus for several years, with the idea of a “knowledge corridor” with a million new homes linking the two historic university cities and linking up with places in between such as Milton Keynes and Bedford. A key element of this will be the restoration of the Varsity line, a victim of the 1960s Beeching Cuts.
Another specific project will fund an extension of the Docklands Light Railway in east London to facilitate 19,000 more homes.
In addition, small and medium enterprises involved in construction would be supported by up to £1 billion in guarantees from the British Business Bank, while there would also be funding to enable another 500 neighbourhoods to “allocate or permission land for housing” via the neighbourhood planning system. This would create homes that would be available at a discount to local people “in perpetuity”.
Public sector housing boosts
Some of the new housing that will be built will be in the public sector, of course. Mr Hammond announced there will be nine new strategic partnerships between the government and housing associations to deliver 13,000 more homes in England.
In addition, of course, there is the lifting of the borrowing cap for local authorities so they can build more council houses, although this policy was unveiled by the prime minister at the Conservative Party conference nearly a month ago. As Mr Hammond noted at the start of the speech, chancellors like a rabbit or two to pull out of the hat in Budgets, but “some of my star bunnies appear to have escaped a little early!”.
A capital gains tax change
Landlords will be affected by a capital gains tax measure. The chancellor reiterated the government’s commitment to exempting family homes from this tax. However, he observed that at present “some aspects of Private Residence Relief extend it beyond that objective and provide relief for people who are not using the home as their main residence.”
In response, he said that from April 2020 lettings relief will be limited to those properties where the owner is living in shared occupancy with the tenant. In addition, the final period exemption will be cut from 18 months to nine.
The measures in the Budget do not represent huge changes for the property sector, but that may be small wonder given the major policy initiatives announced recently. Indeed, with the response to the Letwin report still awaited, some of the most significant initiatives might emerge in the new year.