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Property highlights from The Budget 2017

22nd November 2017

SDLT for first time residential buyers

  • From today first time buyers will pay no SDLT on purchases up to £300,000 (The exemption is available from today)
  • For purchases up to £500,000, no SDLT will be due on first £300,000 of purchase price
  • On purchases of £410,000 (average first-time buyer purchase price in London) £5,500 in SDLT will now be due, £10,500 before budget
  • SDLT due is unchanged for purchases above £500,000

We expect that a first-time buyer will be anyone purchasing a property who has never owned or part-owned another property which was used partly or wholly for residential purposes. This includes freehold property, or leasehold property of at least 21 years. Ownership could be by way of purchase, inheritance or having an interest in a trust.

We presume that this exemption will apply for transactions the effective date of which is today even if it is not completed until subsequently but that also remains to be confirmed.

Housing

  • Intend to focus on increasing supply of land, house building schemes, training of construction workers and planning reform
  • £44 billion to be invested in funding, loans and guarantees to support housing market by providing resources, land and financial incentives to deliver 300,000 new homes each year by mid-2020s. This will include:
    • £630 million small sites fund
    • £2.7 billion housing infrastructure fund
    • £400 million for estate regeneration
    • £1.1 billion for new strategic sites and urban regeneration schemes
    • £8 billion for new financial guarantee schemes to assist private house building and purpose built private rental sector
    • £34 million in construction skills

A significant portion of the Chancellor’s speech related to the Government’s proposals for increased investment in residential development, with housing supply clearly a top priority. The proposals sound encouraging for our residential development clients, but these additional funds are likely to be heavily invested into the affordable housing market for lower income families and first time buyers.

Planning

  • Focus to be on high quality, high density homes in city centres and major transport hubs and to ensure that Local Authorities give planning for more properties suitable for first time buyers.
  • Review in relation to gap between permissions granted for residential property and implementation. Report to be provided Spring 2018.
  • If Report finds that too much land is not being developed for commercial as opposed to technical reasons, Government will consider measures such as new financial incentives and compulsory purchases powers to ensure land is being used for suitable development.

Given the proposal for substantial investment in residential development, it follows that the Government is set to encourage Local Authorities to increase the number of approved planning applications, particularly those in respect of affordable properties. This will be encouraging to our clients intending to carry out or invest in affordable residential development in the next year and beyond. However this may be an unwelcome development for some clients as in future fewer applications may be granted for high value residential or commercial property where the same land may be developed for affordable housing.

Empty Properties

  • New legislation to give Local Authorities the power to charge a 100% premium on Council Tax for empty properties
  • Consultation to take place in relation to barriers to longer residential tenancies in the private rental sector and proposals to encourage landlords to offer longer lease terms to tenants

The proposed legislation relating to empty residential properties could mean increased Council Tax rates for owners of such vacant properties. Although the proposed legislation is only likely to give Local Authorities the option of imposing premium Council Tax rates on vacant properties, it is a step that many LA’s may take, especially those with a demand for additional residential property to meet housing needs in the local area.

Business rates

  • Increases to be calculated with reference to CRI not RPI from April 2018, which will reduce the increases each year

This will be a welcome development to our clients occupying commercial property. Business rates were set to increase next year in line with September’s RPI of 3.9%, but will now be increased in line with CPI’s 3%.

The contents of this update are intended as guidance for readers. It can be no substitute for specific advice. Consequently we cannot accept responsibility for this information, errors or matters affected by subsequent changes in the law, or the content of any website referred to in this update. © Mundays LLP 2017.

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