In what turned out to be Philip Hammond's first and last Autumn Statement (Budgets will happen in the Autumn from next year with Spring Statements following from 2018), there was no seismic change announced likely to affect the Property Industry.
There was, however, good news about the future of the Land Registry, positive investment in infrastructure and some tweaks to the taxation regime. Below is a summary of the key points of interest. The full Autumn Statement can be found here, and the BPF commentary can be found here.
- The government will fund a Cambridge – Milton-Keynes – Oxford corridor with an Oxford-Cambridge Expressway and an East-West rail line.
- Construction of HS2 Phase 1 to start in 2017 with the Phase 2b preferred-route having been announced and an expectation of a business case arriving for Crossrail 2.
- £1bn to be invested in digital communications.
- 100% business rates relief for new full-fibre infrastructure for 5 years from 1 April 2017.
- £170m to be invested in flood defence.
- New projects to be developed suitable for delivery through the PF2 Public Private Partnership scheme. Projects to be confirmed in early 2017.
- £1.8bn to be awarded to Local Enterprise Partnerships across England with mayoral combined authorities to be given powers to borrow for their new functions.
- Work happening towards a second devolution deal with the West Midlands Combined Authority, along with other city deals in the pipeline. Northern Powerhouse Investment Fund and Midlands Engine Investment Funds have funds confirmed.
National Productivity Investment Fund
- There was a clear focus on targeting housing, transport, digital communications and research and development in order to raise productivity and living standards, by establishing the National Productivity Investment Fund.
- Specific projects will be decided upon in due course with expert sector bodies such as Highways England and the Homes and Communities Agency involved.
- Continuing the theme of Budget 2016, sanctions and deterrents will be strengthened against disguised remuneration tax avoidance schemes. There will be a new penalty for those who have enabled another person or business to use a tax avoidance arrangement which HMRC later defeats.
- Government is consulting on requiring intermediaries which arrange complex structures for clients which hold money offshore to notify HMRC of those structures and their client lists. Government is also looking at bringing non-resident companies receiving taxable income from the UK into the corporation tax regime.
- Government is recommitting to the business tax road map which will cut the rate of corporation tax to 17% by 2020.
- Rules will be introduced that limit tax deductions large groups can claim for their UK interest expenses in circumstances where: a group has net interest expenses over £2m; those expenses exceed 30% of UK taxable earnings; and, the group's net interest to earnings ratio in the UK exceeds that of the worldwide group. This will impact from April 2017. There is some industry concern that this will inadvertently hinder investment in real estate.
- Rural rate relief to be doubled to 100% from 1 April 2017.
- Insurance Premium Tax will rise from 10% to 12% in June 2017.
- Letting Agent Fees – these will be banned with DCLG consulting ahead of legislation. Whilst this has been one of the most talked-about features of the Autumn Statement, its impact is expected to be minimal as the fees will, no doubt, be absorbed elsewhere in the process.
- £7.2bn will support the construction of new homes (including the biggest affordable house building programme since the 1970s).
- Housing White Paper to be published shortly, focusing on increasing housing supply and halting the decline in housing affordability.
- Housing Infrastructure Fund of £2.3bn allocated to local government on a competitive basis delivering up to 100,000 new homes.
- Restrictions on Grant Funding to be relaxed allowing providers to deliver a mix of homes for affordable rent and low cost ownership.
- Acceleration of construction on public sector land to be boosted with a further £1.7bn investment.
- Regional pilot of the Right to Buy for housing association tenants will take place allowing over 3000 tenants to buy with the advantage of Right to Buy discounts.
- The cap on Housing Benefit and Local Housing Allowance rates in the social rented sector is to be delayed by one year to April 2019.
Land Registry to remain in the public sector
- Following much industry outcry at the government consultation on privatisation of the Land Registry, the decision has been taken that the Land Registry should focus on becoming a more digital data-driven registration business and, in order to do that, it will remain in the public sector.