Reaction From Irwin Mitchell’s Real Estate Team

The Chancellor George Osborne announced his latest Autumn Statement yesterday and amongst the headlines of a £27bn windfall and a tax credit ‘U-turn’ was the introduction of what could be the largest affordable house building programme since the 1970s.

The package of announcements included 400,000 affordable new homes by the end of the decade with half of these being starter homes, while 135,000 will be shared ownership.

Martha Grekos, Partner and London Head of Planning and Infrastructure Consenting, said: “Once again, housing was at the top of the Government’s agenda. The home ownership mantra continued, even though the Government needs to prioritise simply getting more homes built (regardless of tenure) and sorting out land values. We need a range of different housing types which are affordable to rent and to buy. The Government’s announcement to release land for residential development and its further investment in Ebbsfleet Garden City and other schemes will further fuel housing growth. However, the Government must fire up councils, public bodies and housing associations to build across all residential sectors. Lack of finances and resources within local planning authorities does not help at all and there is still no major announcement in respect of funding models and structures for investment.”

Tom Hall, Real Estate Partner and Head of Irwin Mitchell Strategic Land Group, said:  “The Chancellor’s announcements are an important step in the right direction in ensuring young people can aspire to home ownership and provide some good news for house builders and other stakeholders involved in the delivery of the country’s much-needed new housing. 

“The Government’s announcements should hopefully assist in getting young people on to the housing ladder, which will in turn help to unlock sites for development and provide real incentives for builders to start work on sites where viability of development was previously at issue.  It certainly provides real encouragement for those involved in the delivery of strategic land and in helping to achieve much needed housing number growth across the country.”

As part of plans aimed at boosting infrastructure spending across the UK, the Government also announced that it plans to continue with major electrification projects on the Midland Mainline and Trans Pennine routes.  

These two schemes were manifesto pledges earlier in the year and they will certainly be welcomed by businesses who according to our recent UK Powerhouse survey with Cebr, said local transportation investment would be one of the main drivers for boosting economic growth.

Julie Morrissy, National Head of Construction at Irwin Mitchell, said: “The last couple of years has seen changes in how large-scale infrastructure projects are procured, with Network Rail being keen to drive forward the use of Alliancing Agreements. These are relatively new to the UK and rely upon the parties to a project working closely together in a non-adversarial way.

“A key feature of such contracts, and one which is challenging to construction lawyers and professional indemnity insurers alike, is the concept of “no blame” arrangements which are designed to avoid disputes about liability if there are found to be subsequent defects in the works. We should see a renewed interest in these contracts alongside increased investment in rail sector.”

In another headline grabbing announcement, George Osborne announced a 3% increase to Stamp Duty Land Tax charge on the purchase on second homes.

Alex Barnes, Tax Partner at Irwin Mitchell said: “First interest rates are slashed, then pensions are attacked and now George Osborne has slapped an additional 3% Stamp Duty Land Tax charge on those seeking to acquire second homes. This is without a thought for the fact that many are doing so not to enjoy the benefit of having a second home but instead, to put their hard earned cash into an investment that could actually generate a reasonable return. This measure is hot on the heels of the crackdown on mortgage interest relief for buy-to-let landlords and will leave many questioning where best to invest their money.

“Arguably the additional 3% charge will not affect those it is targeted at as many buy-to-let landlords will simply pass the costs on to their tenants as is expected when the changes to mortgage interest relief are phased in. This could lead to many prospective tenants being priced out of rental properties in areas they want to live in and I suspect many of them will be struggling to see the Government as ‘guardians of economic security’ as Mr Osborne boldly claimed the Tory party is.”