In this year\u00e2\u20ac\u2122s budget, the Chancellor stressed that he was unashamedly supporting business, rewarding work and producing far reaching tax reform which would be simpler and more supportive of business than any other major world economy. Grand statements indeed, but what do the policies laid out in the budget really mean for the property industry? We take a look at the major announcements for the real estate, construction, conveyancing and surveying sectors:<\/p>\n
Changes to Capital Allowances\u00c2\u00a0<\/strong><\/p>\n The biggest changes are the reduction of rates of writing down allowances for chargeable periods ending on or after 1 April 2012 (companies) or 6 April 2012 (unincorporated trades). The \u00e2\u20ac\u02dcgeneral pool\u00e2\u20ac\u2122 will be written down at 18% rather than 20%, and the \u00e2\u20ac\u02dcspecial rate pool\u00e2\u20ac\u2122 (typically plant integral to buildings and cars with CO2 emissions ratings above 160g\/km) at 8% rather than 10%. The amount of expenditure on plant and machinery that qualifies for a 100% immediate deduction will be reduced from \u00c2\u00a3100,000 to \u00c2\u00a325,000 for expenditure from 1 April\/6 April 2012 onwards.<\/p>\n Certain types of environmentally-friendly plant and equipment qualify for 100% first year allowances, including the addition of heat pump driven air curtains to the qualifying categories, in what are called Enhanced Capital Allowances (ECAs).<\/p>\n There are three schemes for ECAs:<\/p>\n The tax implications of 1 and 3 should be considered when upgrades, improvements or investment is made into commercial premises and property.\u00c2\u00a0 Businesses can write off the whole of the capital cost of their investment in these technologies against their taxable profits of the period during which they make the investment, resulting in a substantial saving.<\/p>\n Enterprise Zones<\/strong><\/p>\n The Government has created greater incentives in Britain\u00e2\u20ac\u2122s 24 enterprise zones to encourage job creationism and growth. Companies in an enterprise zone benefit from:<\/p>\n The plan, which is estimated to cost \u00c2\u00a320m next year, should create 7,500 jobs in London, and up to 9,000 in the other zones.<\/p>\n New Buy<\/strong><\/p>\n Mr Osborne reaffirmed the 12th<\/sup> March launch of \u00e2\u20ac\u02dcNew Buy\u00e2\u20ac\u2122, making mortgages available for purchasers to buy a new home with just a 5% deposit. Up to 100,000 households should be helped by this scheme and it should go some way to alleviate the gap in demand left by the now concluded stamp duty exemption for first time buyers.<\/p>\n Industry commentators also hope that the move will inspire confidence in house builders that their investment will be realised, and prompt a greater growth in house building.<\/p>\n Right to Buy First introduced by the Thatcher Government under the Housing Act 1980 in a drive to create a property owning democracy (read our article on the state of this ideal in the 21st Century here<\/a>), the Right to Buy scheme has been reinvigorated as part of this budget. Social housing tenants will get a discount of up to \u00c2\u00a375,000 to go towards the purchase of their home with the Government planning to replace every home sold with a new affordable, rented property.<\/p>\n Corporation Tax Lauded as one of the biggest steps towards incentivising business investment in Britain, the reduction of corporation tax will be from its current level of 26% down to just 22% by April 2014 in incremental steps. The first step will be a 2% reduction to 24% in April of this year and, at the lowest rate, it will be one of the lowest levels in the developed world. Germany, for example, charges 29.8% on average (including trade tax).<\/p>\n Stamp<\/strong> Duty Land<\/strong> tax<\/strong><\/p>\n As of midnight on 21st<\/sup> March, a new rate of 7% was introduced for properties worth more than \u00c2\u00a32m. This will not, however, damage housing associations carrying out stock transfers, as any purchase of six or more properties together will be treated as \u00e2\u20ac\u02dcnon-residential\u00e2\u20ac\u2122 and charged at the previous rate of 4%. Likewise, commercial property will be charged at the previous 4% rate.<\/p>\n Rate relief will still be available for the purchase of multiple properties, so stamp duty will be charged in these instances at the level relevant to the average value of the properties and can therefore be down at 1%.<\/p>\n In the absence of a \u00e2\u20ac\u02dcmansion tax\u00e2\u20ac\u2122, this should help secure greater revenue from the super rich without damaging property developers and housing associations.<\/p>\n Important measures have also been introduced to reduce the amount of avoidance. A tax of 15% will be applicable to the transfer of properties worth over \u00c2\u00a32m into companies or other corporate vehicles (like trusts) after March 21st<\/sup>\u00c2\u00a0 unless that company has carried on a property development business for over 2 years and is acquiring the property to develop and sell on, not to rent out.<\/p>\n Likewise, an annual charge will be introduced for properties over \u00c2\u00a32m in value being held by companies or corporate vehicles which could amount to between \u00c2\u00a315,000 and \u00c2\u00a3140,000 a year depending on the value.<\/p>\n Kick Start Stalled Sites<\/strong><\/p>\n Mr Osborne promised to pump an extra \u00c2\u00a3270m into the Growing Places Fund, which was originally a \u00c2\u00a3500m scheme released in November 2011, to generate housing and economic growth through addressing immediate infrastructure and site constraints. The money is to be raised from existing department budgets and should be sustainable, with each local fund reinvesting the money to unlock stalled development.<\/p>\n Along similar lines, an additional \u00c2\u00a3150m will be released into the Get Britain Building fund, bringing its total to \u00c2\u00a3570m. The scheme aims to help so called \u00e2\u20ac\u02dcshovel ready\u00e2\u20ac\u2122 sites to secure the finance they need to get building. A shortlist of sites already exists and 18 specially commissioned schemes will separately receive funding. You can read our article on the subject here<\/a>.<\/p>\n The expectation with the Get Britain Building scheme is now to create 16,000 homes with the \u00c2\u00a3570m, which is slightly worrying as the expectation was to generate 16,000 homes with the original \u00c2\u00a3420m. Nevertheless, industry stakeholders including the National Housing Federation are welcoming the extra funding as vital to get Britain\u00e2\u20ac\u2122s estimated 130,000 (est. Nov 2011) stalled sites moving forward.<\/p>\n Release of Public Land Mr Osborne has committed to releasing enough public land before April 2014 to build 100,000 new homes. A progress report with further details has been promised by summer 2012.<\/p>\n Criticism has been levelled at this announcement relative to the amount of land actually available. In 2009, 31,160 hectares of previously developed land was suitable for housing or other redevelopment. This relates to an estimated 388,500 homes which makes the 100,000 promised just a fraction of the possible total. Regardless, 100,000 new homes, many of which will be affordable, will go along way to alleviating the “housing shortage” we have talked of many times (see our most recent article here<\/a>). Whether they will materialise however is another matter, particularly when considering the amount of stalled sites elaborated upon above.<\/p>\n Listed Buildings Whereas previously approved alterations to listed buildings could be zero rated and repairs and maintenance were standard rated, the Government has announced that all works to listed buildings will now be standard rated. Lovers of Britain\u00e2\u20ac\u2122s fine construction heritage will not be happy with this decision, one which will make it more expensive for the residents and carers of listed buildings to keep them updated and compatible with modern living. We wrote to explain the confusion surrounding listed buildings and VAT just a few weeks ago, find our article here<\/a>.<\/p>\n As an experienced Chartered Surveyor with particular interest in the field of old and listed buildings, our Editor feels strongly about the issue of listed buildings VAT. Read his views on the subject here.<\/a><\/p>\n \u00c2\u00a0—<\/p>\n All of the aspects above will have some affect on the property industry and, not least, the work of surveyors up and down the country. As a network of local Chartered Surveyors all over England and Wales, the propertysurveying.co.uk<\/a> community is looking on with interest as to the ultimate success or failure of these measures.<\/p>\n","protected":false},"excerpt":{"rendered":"\n
\n
\n<\/strong><\/p>\n
\n<\/strong><\/p>\n
\n<\/strong><\/p>\n
\n<\/strong><\/p>\n