23 Nov 2016 03:07pm

What the Autumn Statement means for property

A £3bn housing fund to "get Britain building" was previously announced which will help small family firms to build 25,000 new homes by 2020 and up to 225,000 in the longer term. Today it was announced that a further £1.4bn cash injection will be given to help build 40,000 affordable homes, together with a further £2.3m of funding to build 100,000 new homes in areas of high demand

Caption: How the Autumn Statement will impact buying and renting property

Restrictions on the use of government grants will also be relaxed to allow providers to deliver a wider range of housing types. This is great news for property development companies, especially SMEs who will have opportunities for growth and will be in a position to offer more jobs and apprenticeships.

However, this will impact residential buy-to-let landlords who may find that they have to reduce rents. With more new builds available for first time buyers, the availability of affordable rented accommodation will increase and the rental market will need to become more competitive with fewer people relying on it.

Help to Buy

A large scale regional pilot of Right to Buy for housing association tenants and continued support for home ownership through the Help to Buy: Equity Loan Scheme and the Help to Buy ISA was announced.

The incentives will certainly help to drive property sales; however, property prices are likely to continue to rise as demand still exceeds supply.

Corporation tax

Corporation tax rates will be reduced to 17% by April 2020, from its current level of 20%, which will be pleasing news for those operating their property rental or development businesses through a corporate vehicle.

Lower corporation tax rates are likely to attract foreign investment and this is positive news for both commercial and residential landlords with workers requiring both homes and office space.

Buy to let

There was no further change to the buy-to-let restrictions on claiming mortgage interest relief coming in from April 2017 and which will mean by 2020 that interest relief can only be claimed at the basic rate tax.

With this still in place and the commitment to lowering corporation tax to 17%, it could mean that landlords holding properties in a limited company structure may be a more desirable option than holding personally.

Lettings agents will be banned from charging fees to tenants, and instead the administration costs, including reference, credit and immigration checks, will be passed on to landlords. In the short term, rents may increase as landlords try to pass this cost back to tenants. However it is more likely they will bear the cost to ensure they can rent the properties successfully. Ultimately, this is likely to spur competition as landlords, unlike tenants, can shop around for the cheapest agent and will want to secure the most favourable rates to ensure the impact on their bottom line is reduced.

Stamp Duty Land Tax

The chancellor did not bow to pressure to lower stamp duty rates for expensive properties or abolish the 3% stamp duty surcharge for second properties which came in from April 2016. This is slowing the housing market, particularly in London and unless the top end of the property market can be released from the current constraints, then there may be downward pressure on the whole of the housing market and a lack of movement, which is not good news for either buyer or seller.

There was also no reduction to the 5% Stamp Duty Land Tax for large commercial properties which many in the commercial property sector were hoping for.

Business rates

As previously announced, the government will stick to the business rates reduction package, which is good news for retailers and property occupiers.

Capital gains tax

There was no further update on the previous announcement that from 2019, capital gains tax will need to be paid within 30 days of the disposal of residential property and many questions remain unanswered around the administration of this.

Stephanie Levin is a partner at Shelley Stock Hutter


Related articles

HMRC property raids increase by over a quarter

How Britain's EU exit will impact the property sector

Is the UK experiencing a housing bubble?

Task force to tackle tax evasion in London property market