- Stamp duty reforms extended to larger investors
The stamp duty reforms announced last year will mean that any purchases of additional homes in the UK will incur an addition 3 per cent levy. These new rates still come into effect in April 2016, but they will now apply to larger corporate investors too.
“I’ve listened to colleagues and the rates will apply to large investors too,” confirmed Osborne. “We’re going to use receipts to support community housing trusts, including £20 million to help young families onto the housing ladder in the South West of England.”
- Stamp duty reforms for commercial property
In 2014, Osborne reformed stamp duty on residential UK property, moving from a slab system to a progressive “slice” system. As a result, 98 per cent of buyers are paying the same or less, while revenues from expensive homes have risen.
Following a suggestion from the IMF, the same reforms will now be extended to the commercial property sector.
Stamp duty for commercial property will be cut to 0 per cent for properties worth up to £150,000. A 2 per cent rate will apply to the next £100,000, while a 5 per cent top rate will apply to properties worth over £250,000.
“There will also be a new 2 per cent rate for those high value leases with a net present value above £5 million,” added Osborne.
“These reforms raise £500 million a year. And while 9 per cent will pay more; over 90 per cent will see their tax bills cut or stay the same. It’s a big tax cut for small firms.”
The new tax rates will come into effect from midnight tonight.
- The “Airbnb tax relief”
Osborne announced that the government will help “the new world of micro-entrepreneurs” who sell services online or rent out their homes through the internet.
Those who rent a home online via sites such as Airbnb, therefore, will benefit from a £1,000 tax allowance every year.
“There will be no forms to fill in, no tax to pay,” said Osborne. “It’s a tax break for the digital age and at least half a million people will benefit.”
- Crackdown on UK property development tax
The government will crack down on property development taxes, to ensure that tax is paid on projects in the UK.
“The government believes it is unfair to allow property developers to use offshore structures to avoid UK tax on their trading profits from developing property in the UK,” commented Osborne. “By enforcing the international rules on the taxation of trading profits derived from property, the government will level the playing field between UK and offshore developers.”
- Lifetime ISAs and personal savings boost
Savings are a crucial step in being able to afford purchasing a home. Building on the impact that Help to Buy has had upon the ability of younger buyers to get onto the housing ladder, the government will now introduce a new Lifetime ISA.
This £4,000 ISA will allow adults under 40 to save money for retirement or to buy their first home, with a 25 per cent bonus paid by the government on the money put aside.
“Money put into this account can be saved until you are over 60 and used as retirement income, or you can withdraw it to help buy your first home,” commented Osborne.
The total amount you can save each year into all ISAs will also be increased from £15,240 to £20,000 from April 2017.
Personal tax allowances will also be increased to £11,5000 in April 2017, following a rise to £11,000 in 2016, while the higher rate threshold will rise to £45,000 in April 2017.
- Flood protection
The government has announced more funding to protect homes and businesses from flooding. Funding for new defences will be given to Leeds, York, Calder Valley and Cumbria, as well as for maintenance of existing defences.
This will be paid for by Insurance Premium Tax, a tax on insurers. The standard rate will rise from 9.5 per cent to 10 per cent.
- HS3 and Crossrail 2
The UK’s regional cities are enjoying strong growth both in terms of their economy, employment and construction activity. They are set to enjoy a further boost through the introduction of the high-speed railway HS2. Now, £60 million has been announced to develop plans for HS3 to cut journey times to around 30 minutes between Leeds and Manchester, as well as improving transport connections between other cities in the north.
An £80 million fund has also been announced to continue planning for Crossrail 2. This proposed rail route will connect South-West and North-East London, increasing Tube capacity and reducing the pressure on Victoria and Waterloo stations.
- Starter Homes Land Fund prospectus
The Autumn Statement 2015 set out the government’s plan to deliver 400,000 affordable housing starts by 2020-21, including 200,000 Starter Homes and 135,000 Help to Buy Shared Ownership properties.
To help deliver this, the 2016 Budget announced a new Starter Homes Land Fund prospectus, inviting Local Authorities to access £1.2 billion of funding to re-mediate brownfield land to be used for housing, to deliver at least 30,000 Starter Homes.
The government will also bring forward £250 million of capital spending to 2017-18 and 2018-19 for the delivery of 13,000 affordable homes two years earlier than planned.
- Reform of home buying process
The government has previously announced plans to boost competition in the UK and bring down bills for families, including a review of the property buying and selling process.
As part of this ongoing process, the government will shortly publish a call for evidence on how to make the process better value for money and more consumer-friendly. At the moment, consumers spend £270 million each year on failed housing transactions.
- Garden towns, cities, and villages
The government supports the construction of a new wave of garden towns and cities across the country, with the potential to deliver over 100,000 homes. The Budget announces that the government will legislate to make it easier for local authorities to work together to create new garden towns, as well as consult on a second wave of Compulsory Purchase Order (CPO) reforms “with the objective of making the CPO process clearer, fairer and quicker”.
- Unlocking more land for housing
At the Autumn Statement 2015, the government committed to releasing enough public sector land for 160,000 homes. Now, for the first time, Local Authorities are collaborating with central government on a local government land ambition, working with their partners to release land with the capacity for at least 160,000 homes.
The Homes and Communities Agency will work in partnership with Network Rail and local authorities to provide land around stations for housing, commercial development and regeneration. The government will set out shortly which sites will take part in the scheme.
- More streamlined planning
The government has already undertaken a series of reforms to streamline and simplify the planning system, but Osborne says that “further reform is needed” to deliver the government’s target of 400,000 affordable housing starts by 2020-21.
The government therefore intends to move its planning system, to a “more zonal and ‘red line’ planning approach”, where local authorities use their local plans to signal their development strategy from the outset and make maximum use of permission in principle, to give early certainty and reduce the number of stages developers must go through to get planning permission.