Autumn Statement – Pick and Mix Outcome for Property

Autumn Statement -  Pick and Mix Outcome for Property

Chancellor Philip Hammond has presented his first Autumn Statement against a backdrop of post-Brexit uncertainty. Property and construction featured heavily with some positive moves forward for the industry, but some changes Abode2 would have liked to have seen were overlooked.

It is disappointing that the Autumn Statement did not include a reduction in Stamp Duty Land Tax (SDLT). More than 70% of UK-based property and construction businesses view the tax system as unfavorable, with 65% believing SDLT is the biggest tax barrier to business growth. High levels of SDLT result in the government raising less money due to a drop in transactions, effectively ‘drying up’ the market and reducing housing starts.

Despite no significant changes to our planning legislation to stimulate housing supply, it is positive to see further government funding of £2.3 billion into a new Housing Infrastructure Fund providing infrastructure targeted at unlocking new private house building, and £1.7 billion to speed up house building on public sector land.

It is also proposed to bring non-resident companies with UK income into the UK corporation tax net. This could affect non-resident corporate landlords. Whilst corporation tax rates are due to drop below the 20% income tax rate, application of corporation tax rules could restrict interest deductions to 30% of earnings and limit loss offsets under changes due be introduced over the next few years. Full details as yet have to emerge, but this could have a significant impact on property companies.

The £2.3 billion housing infrastructure fund to help provide 100,000 new homes in high-demand areas creates a good soundbite, however with 300,000 houses required each year in the UK, and just over half that number being delivered, the scale of the housing crisis, predominantly lack of housing supply, becomes all too apparent. The fund will not start until 2021 and represents four months of the annual requirement. The biggest incentive that could help provide new homes in high demand areas, especially the south east of England, would be for government to require, indeed insist upon, local authorities to provide timeous local plans, where they have to meet their housing demand in full, having undertaken full green belt reviews. Not a snappy soundbite, but less obfuscation by local authorities in bringing forward local plans and addressing the actual issue, head on would be welcomed.