2 December 2016 by

How does the Autumn Statement affect the property market?

The new Chancellor of the Exchequer gave his much anticipated Autumn Statement to Parliament on 23 November 2016.  It was the first time details of the economy have been particularised since the UK voted to leave the European Union in June.

The property market has experienced radical fluctuations since the last budget was revealed in March 2016.  The uncertainty of Brexit and the change to stamp duty charges have all contributed to the property market slowing down.

The Autumn Statement shows a drive towards supporting the UK’s infrastructure with construction of affordable homes and initiatives for first time buyers featuring heavily.  Much of the detail on implementation has been left for parliamentary consultation, but a summary of the key changes for the property market are listed below.

1. The introduction of a new Housing Infrastructure Fund (HIF)

The Chancellor announced a new National Productivity Investment Fund (NPIF).  The aim of the NPIF is to provide additional funding in areas that are essential for boosting the UK’s productivity.  From this fund, £2.3 billion pounds has been allocated to the Housing Infrastructure Fund (HIF) for projects that will support the construction of up to 100,000 new homes “in the areas where they are needed most”.

Further details will be contained in the Housing White Paper.

2. Affordable homes

The Chancellor has relaxed current restrictions on the government so that £1.4 billion can be invested in building 40,000 new affordable homes by 2020-21.  London will receive an additional £3.15 billion for 90,000 new homes.  The plans include some ‘shared ownership’, affordable rent houses and low cost ownership properties.

3. Construction on public land

£1.7 billion will be invested by 2020-21 through the NPIF to speed up the construction of new homes on public sector land.  The government will pilot the scheme which is hoped will improve efficiency for a faster delivery of homes.

4. Right to Buy and Help to Buy Schemes

The Chancellor announced plans to fund a large-scale regional pilot of the Right to Buy scheme for housing association tenants.  It is hoped that this will enable more than 3,000 tenants to buy their own home with Right to Buy discounts.

The government will continue to support homeownership through its Help to Buy Equity Loan Scheme and Help to Buy ISA.  Details of these schemes are available here.

5. Tenant’s Letting Agents Fees

In England and Wales a tenant can be charged for a range of administration tasks carried out by lettings agents, including referencing checks and drafting tenancy agreements.  According to Shelter, the average upfront costs faced by renters using a letting agency are more than £1,000 nationally and over £2,000 in London.

By shifting the costs of fees to landlords it is expected to save 4.3 million households hundreds of pounds.  Whilst the change is welcomed by renters, some see the move as detrimental arguing that these extra costs will be passed on in the form of higher rent.  A ban on lettings fees to tenants has been operational in Scotland since 2012 and has shown no negative impact.

Conclusion

The Autumn Statement contains helpful new funding initiatives and valuable changes that will boost housing supply and accessibility of home ownership.

However, the market isn’t working for everyone and some feel that it did not go far enough to get the market back on track.  Melanie Leech, Chief Executive of the British Property Foundation, said:

“One big disappointment is the continued stamp duty surcharge on institutional Build-to-Rent housing, which sends out the wrong signals when those institutions are willing to invest £billions on the new homes that we need”.

It remains to be seen how well the budget will work in practice and we await publication of the Housing White paper for more details on how the Government proposes to increase housing supply and housing affordability.

If you have any questions regarding Residential Conveyancing please contact Victoria Sedgwick in our team on 020 7288 4700 or email her on victoriasedgwick@boltburdon.co.uk.

You can also contact one of our other solicitors in the Residential Property team here.

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