Statement Provides Some Cheer But Not The Panacea For Property Sector
Thomas Hall, at the Sheffield office of Irwin Mitchell, comments on what he believes the Chancellor's Autumn Statement means for the property sector.
“Amongst the headline gloom of the Autumn Statement, the details announced provided some cheer for those in the property industry, although far from the panacea that is required to kick-start the construction industry.
“The housing market remains stagnant and transaction levels are far below their historic average levels. Encouraging first time buyers on to the market is the catalyst for growth, allowing builders to construct and implement new schemes, creating jobs in the construction sector and increased tax revenues for the Treasury. In this context, the scrapping of the first-time buyer relief from Stamp Duty (on houses up to £250,000) from March (although not unexpected) is disappointing. Even the Government’s own Office for Budget Responsibility does not see much pick up in activity in the housing market, at least in the short term. Their prediction for tax receipts from SDLT are only a small growth in 2012-13 to £6.4bn (from £6bn in 2010-2011). Their longer term prediction is more optimistic, suggesting a rise to £11.4bn by 2016-2017, although this is clearly dependent on a major shift in sentiment and activity in the housing market over the next few years.
“More welcome is the extra incentives (alongside those announced last week in the Government’s National Housing Strategy) to be given to social tenants to buy their homes. Osborne announced bigger discounts of up to 50% to try to “reinvigorate” the right-to-buy scheme. Whilst the government has given its commitment to delivering over 150,000 new affordable homes, it also announced yesterday that for each house purchased under the “right to buy” scheme, it would also build an additional affordable home (on top of these numbers already announced). This news will be broadly welcomed by the ailing housebuilding sector. We in the Property industry broadly welcome the Government’s recognition that the construction industry generally, and the housebuilding sector in particular, is vital to stimulate growth and job creation in the wider economy. However, much more could have been done to assist the construction industry and increase the viability of a number of approved, but mothballed, schemes.
“The problems that high street retailers are suffering have been well documented and retailers were hoping for some boost from the Autumn Statement. Osborne provided some grounds for optimism with the announcement of an extension of six months to the end of March 2013 on the relief that all small businesses with properties will receive from business rates. (Companies whose premises have a rateable value up to £6,000 will receive full relief; there is tapered relief on premises with a value up to £12,000.) It has been suggested that around half a billion business will benefit from this extension, which is broadly welcomed at a time when business are struggling generally.
“The Government however did fall short as it failed to reverse the lowering of the empty rates relief threshold for all businesses – something we have been campaigning for and supporting the British Property Federation with. A decision by the Government in this area would have been welcome as we believe it is hurting development and stalling new business growth.
“However, the property industry is not excluded from the overall gloomy picture presented by the Autumn Statement, which provides only a modicum of assistance to those in this industry and raises as many new questions as it provides solutions.”