Spring Budget 2016: How Will It Affect The Property Market?

News at Stirling Ackroyd | 18/03/2016

Chancellor of the Exchequer, George Osborne, annouced the 2016 Spring Budget this week. Here are some of the key points on how it's going to affect the London property market.

Key Points:

  • Changes to commercial stamp duty, with 600,000 small business taken out of business rates
  • Reform Stamp Duty Land Tax on non-residential property transactions, cutting the tax for many small businesses purchasing property, with over 90% of non-residential transactions paying the same or less
  • Move to a more zonal and ‘red line’ planning approach, where local authorities use their local plans to signal their development strategy from the outset and make maximum use of permission in principle, to give early certainty and reduce the number of stages developers must go through to get planning permission
  • Measures to minimise the delays caused by planning conditions, and ensuring the delivery of local plans by 2017
  • Increasing transparency in the property market, including by increasing the visibility of information relating to options to purchase or lease land
  • Local Authorities to collaborating with central government on a local government land ambition, working with their partners to release land with the capacity for at least 160,000 homes, helping to support the government’s policy on estates regeneration
  • Provision of land around stations for housing, commercial development and regeneration
  • To increase densities on brownfield land, following the consultation on ‘building up’ in London, the government will consult on providing similar powers through devolution deals.
  • Stamp Duty changes coming into effect in April will apply to large property investors
  • Crossrail 2 across London to be commissioned (with potential future Eastern branch) – government to provide £80 million to develop the project

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Andrew Bridges, managing director of Stirling Ackroyd comments on the announcement: “The Chancellor is chancing London’s status as a world-leading capital. What Londoners needed today was a bold move to free the capital from housing uncertainty – but what we got was mainly a bigger bet on the same status quo.

“If incremental, the direction of travel seems correct. Today might be a starting point in tackling the complex planning system. A more integrated effort between local councils and central government may help. Too often, the multiple stages of planning applications deter builders, and deny Londoners new homes.

“But the biggest problem will be transforming attitudes. Across 2015, London borough councils rejected 23% of potential new homes. Even if everything goes exactly as hoped-for in the latest Mayoral plan, London will face a minimum yearly shortfall of 6,450 – a massive 13% of the new homes needed unless boroughs exceed targets.

“Policies to increase density on brownfield sites is good news and should encourage more development. Higher density buildings near the centre of London provide the key for housing – helping more people onto the ladder. But again, the practical means by which this is done still needs to be fleshed out.

“The Chancellor may have a long term plan for the economy – but a viable long term plan for housing in London remains to be seen.”