Autumn Statement 2013 predictions: housing

Ros Rowe, Real Estate Partner, discusses announcements the Chancellor might make in relation to housing in the UK.

 

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The lack of housing is a major issue in the UK, particularly for London. The Government’s initiatives have encouraged more house building. Help to Buy (with mortgage guarantees and equity loans for homes up to £600,000) has led to the purchase of more homes but there is still a lack for supply of homes to buy and rent. Rents are increasing and the recovering economy is causing the buyer market to heat up with sealed bids not only in London but also the Home Counties. We’ve now seen the Government float the idea of taxing non-residents who hold residential property in the UK. It would be a popular move but the market has told the Government that it won’t increase the supply of housing nor the tax take since few of those properties are sold. So instead the Government could introduce a Help to Let initiative to encourage local councils to sell more land for new rented properties. Their reward would be to keep the sale proceeds or some part of the additional council tax paid by the new occupiers.

Housing could also be used to raise revenue. The Government could raise the stamp duty land tax rate on expensive houses (those costing more than £2m).  Currently the rate is 7% or 15% if an individual buys his home indirectly (for example through a company). He has to pay an Annual Charge (up to £140,000) which could easily be increased as well as council tax if a new, higher value, council tax band is introduced.  

Some of the cash could be put toward sorting out the “dead zone” for stamp duty land tax. This is for properties with a value of around £250, 000 (close to the average price of a house) where the rate moves from 1% to 3%.  It’s such a cliff edge that few properties are sold in this band but could be resolved with a  new 2% rate at £250,000 and perhaps with  3% applying from  say £300, 000.

I don’t anticipate much help for business with no change on Business Rates or capital allowances. In summary I expect this Autumn Statement to focus on housing not business.


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