BUDGET 2016

In this year’s Budget there were a number of announcements, covering: devolution, infrastructure, housebuilding and planning, stamp duty, and ISAs – all of which will potentially have a large effect on those involved in the property and planning sectors.

New devolution deals and new directly elected mayors will enable these combined authorities to have greater control over planning. With each devolution deal differing in its details, these will require careful research and consideration.

The Chancellor committed to a number of infrastructure projects, with particular emphasis on those in the North of England. These will help to deliver his vision of a ‘Northern Powerhouse’. Crossrail 2 has also been given the go-ahead, which will create another layer of planning concern and impact in key London boroughs.

Housebuilding continues to be a key Government focus, with the Chancellor looking to promote and encourage the growth and creation of ‘garden villages and towns’. Further attempts to streamline the planning process were also included, along with a commitment to encourage local authorities to speed up their local plans. These reforms all look set to see new legislation later this year and are based on existing consultations so we should expect them to move quickly.

On stamp duty, the Chancellor’s previous reforms to residential stamp duty will be extended to cover commercial property. For small businesses and smaller investors, this could potentially mean a tax-cut. However, for larger companies involved in large scale property purchases, especially in London, they could see their tax bill go up.

A new ‘Lifetime ISA’ is another attempt by the Chancellor to encourage home-ownership and to address the growing problem of young people being priced out of the housing market. This is on top of, not instead of, the ‘Help to Buy ISA’, which the Budget recommitted the Government too, alongside other existing schemes, such as ‘Right to Buy’.

Key features in detail:

Devolution

Devolution will continue and be expanded. As well as the combined authorities and elected mayors already announced in the North and the West Midlands, the Chancellor announced a new East Anglia combined authority with an elected mayor; a new West of England mayoral authority; and, a Greater Lincolnshire mayoral authority.

From April 2018, the Greater London Authority will retain all business rates it raises.

In addition, Lord Heseltine will head up a new growth commission for the Thames Estuary.

The Government is also planning on consulting with the city regions on greater powers to allow ‘building up’, increasing density on brownfield sites.

Infrastructure

The Government will follow through on the National Infrastructure Commission’s recommendations and continue to develop greater links across the North of England. £60 million has been announced to boost links between Northern cities. Projects include commissioning HS3 (between Manchester and Leeds, cutting journey times to 30 minutes); investing in the M62 and creating a four lane motorway; building a new tunnel road between Manchester and Sheffield; and, upgrading the A66 and the A69.

Crossrail 2 will get the go ahead and £80million to build it. The proposed Crossrail 2 route will connect South-West and North-East London, increase tube capacity and reduce the pressure on Victoria and Waterloo stations.

The Budget sets out plans to ‘regenerate’ areas around stations, selling off surplus railway lands to allow redevelopment. This will take place in conjunction with local authorities and Network Rail.

The Government will increase insurance tax premiums by 0.5%, with all of the additional revenue going to fund new flood defences across the country.

Housebuilding & Planning

The Government is keen to incentivise the creation of so called ‘garden villages and towns’ and are introducing new support for local authorities to assist in their delivery.

The creation of entirely new settlements will be fast-tracked through the planning system, with new legislation being introduced to speed up and simplify the planning process. The Chancellor will also provide planning ‘incentives’ to support areas seeking to bring forward new settlements, in return for ‘significant’ housing delivery.

The Budget sets out the Government’s intention to legislate to ensure that pre-commencement planning conditions can only be used with the agreement of the developer, and to review the process of deemed discharge for conditions, to ensure it is effective and its use maximised.

The Government also announced it will set 3 month deadlines for Secretary of State decisions on called-in applications and recovered appeals.

Attempts to speed up the adoption of Local Plans also featured, with the Government set to lay out further incentives later this year. In addition, the Government will also look at ways to reduce the weight of outdated plans in decision-making.

Stamp Duty Reform

The Chancellor announced that reforms to stamp duty will be extended to commercial property. Stamp duty is to be reduced for commercial property for the lower bands. The reforms will come into effect from midnight tonight.

The new rates and tax bands will be 0% for the portion of the transaction value up to £150,000; 2% between £150,001 and £250,000, and 5% above £250,000.

Buyers of commercial property worth up to £1.05 million will pay less in stamp duty. It is estimated that over 90% will experience a tax cut or no tax increase.

Stamp duty rates for leasehold rent transactions will also change, with a new 2% stamp duty rate on leases with a net present value over £5 million.

In addition, previous reforms to stamp duty on residential property will be extended to cover large investors.

New lifetime ISA

A new ‘Lifetime ISA’ for the under 40s will enable savers to save up to £4000 a year, with the Government adding an extra £1000.
From April 2017, any adult under 40 will be able to open a new Lifetime ISA. Up to £4,000 can be saved each year and savers will receive a 25% bonus from the government on this money.
Money put into this account can be saved until savers are over 60 and used as retirement income, or can be withdrawn to help first time buyers buy their first home.