The October 2018 Budget - what the property industry can expect
This week the Chancellor unveiled the Budget 2018, a new SBA for commercial developments and abolishment of stamp duty for first-time buyers of shared-ownership homes. Oliver Lowrie, director at Ackroyd Lowrie comments on the principal changes and what the property industry can expect from them.
Help to Buy
Although Help to Buy was not mentioned in Hammond’s speech it did feature in the Treasury’s Red Book. In a nutshell, Help to Buy was meant to run out in 2019 but has been extended for First Time Buyers to 2023, with a £600,000 property price cap in London.
Oliver Lowrie says "This is significant. Property transactions are down and Help to Buy is artificially inflating a stagnant market. House builders will be relieved but unsurprised by Hammond’s decision to extend this”
"Also unsurprising is the omission of any mention of the second stamp duty on foreign investors that Theresa May announced at the recent Tory Party Conference. https://ind.pn/2xOYcl2
Hammond is looking to support the property market in the run up to Brexit and foreign cash will be needed to do this.”
Housing and Infrastructure fund
An extra £500m of funding has been designated to the Housing Infrastructure Fund, of which £291m will be committed to London, with the intention to unlock 650,000 new homes.
Oliver Lowrie comments “This Infrastructure fund will be used to unlock developments in London on strategic industrial and other brownfield sites where the land cannot afford to fund de-contamination, affordable housing, retained employment, and infrastructure. The New London Plan will benefit from the infrastructure fund which will plug the funding shortfall identified by the GLA.”
Hammond elaborated on this, claiming that the infrastructure fund would receive a further £38bn by 2023/24. Whilst the government revealed it will be following the recommendation of the National Infrastructure Commission to back the Cambridge-Oxford Arc in order to see a million homes built between the cities by 2050.
"As London’s capital growth stutters to a halt, more and more development opportunities in the regions will become available, particularly surrounding these infrastructure projects” says Lowrie.
Tax relief for new non-residential buildings
The new Structures and Building Allowance (SBA) will be introduced for commercial structures and buildings. Meaning that an annual rate of 2% tax relief will be given over a 50 year period on all new non-residential projects (excluding bare land). Upon sale of the building/structure the purchaser steps into the shoes of the seller, continuing to claim the relief for the remainder of the 50 year period.
The introduction of these capital allowances is indicative of a long-term intention to improve the UK as a destination for investment and in line with the New London Plan, shows an increase in commercial investment and growth alongside residential development.
For more detail on the 2018 Budget visit www.gov.uk/government/topical-events/budget-2018