Catherine Penman, head of research, Carter Jonas, commented: “In the main, this was a good budget for the property sector with several measures announced that may help kick-start the construction industry, such as changes to the Use Classes Order when converting empty offices and shops into homes, the Government-backed shared equity scheme for first time buyers and the announcement of first ten Enterprise Zones. It appears that the planning regime will be relaxed, however, the statement that “the default answer to development is yes”, does come as a surprise, although the devil will undoubtedly be in the detail. Despite the emphasis on growth and employment if the question is can I build houses here, the answer may still be “no”.
Richard Liddiard, head of rural agency, Carter Jonas commented: “The Budget will assist small rural businesses, although it did not specifically target rural landowners. Importantly, there appears to be no changes introduced for Agricultural Property Relief and Business Property Relief which could have negatively affected rural landowners especially. The vibrant market for farms and estates has not been affected by the headline announcements but we will need to check out the small print. The poor forecast for economic growth is likely to create a ‘drag’ on confidence which will have some effect on the farmland market due to the delayed recovery of the UK economy. Inflationary pressures are affecting input costs in agriculture and this will reduce profitability within the sector and dairy/livestock sectors in particular where farmers are struggling to make ends meet.”
Chris Haworth, head of commercial, Carter Jonas, commented: “The announcement that the default presumption is in favour of development is good news, but it is very difficult to see how this squares with the localism agenda. We still have the situation where local councillors now stand fully responsible to the electorate for any development proposals in their area and even a
small vociferous minority can derail these. Until we get more clarity on how the localism agenda will work in practise, and particularly how it will work where cross-boundary development is involved, I am still not convinced that current policy will deliver the commercial and residential
development that is much needed to regenerate an economy that has been through the worst recession in living memory.”
David Boulton, partner, planning division, Carter Jonas, commented: “The prospect of major planning reform to free the market and growth are nothing new in reality and reflects the principle outlined in the Localism Bill, a 'presumption in favour' of sustainable development is already part of this. Seeing the reform of the planning system as a panacea for growth and curing the ails of the economy is optimistic and fails to appreciate the mediation and basic plan-making role of the planning system and the fact that this takes time, which isn't ideal when an economy is desperate for growth and delivery of development. The motivation behind this fast-track approach to planning may be to release public land for development to fill government's empty coffers and to pump prime the development industry.”
Highlights from the Budget 2011
George Osborne opened his Budget speech by announcing that the UK economy has moved from rescue to recovery mode and is now focussing on reform to drive growth over the medium-term.
Highlights of his speech include:
• Economic growth forecasts were downgraded from 2.1% to 1.7% in 2011 and from 2.6% to 2.5% to 2012. However, the amended forecasts then rise above current anticipated levels in 2013, 2014 and 2015 offering hope that economic recovery, once evident, will rebound more sharply than originally anticipated.
• Inflation is expected to remain between 4-5% in 2011, although drops to 2.5% in 2012 and 2% in 2013.
• The tax system should be simplified although levels not necessarily raised, with 43 different reliefs to be abolished as part of the simplification process and direct tax to be indexed to CPI by April 2012. Osborne outlined his objective to create the most efficient tax system within the G20.
• A 2% reduction in corporation tax was outlined, opposed to the 1% previously planned. That said, the small business rate is only reduced by the previously announced 1% to 20%. The bank level will be adjusted in order to ensure they do not pay any less tax as a result.
• The announcement of the taxation of high value property requiring reform is likely to have a significant impact on the high end residential and country house market.
• In terms of taxation, a significant 10% discount on inheritance tax for parties leaving 10% of their estates to charity was announced. However, the recently announced Inheritance Tax Review suggests that IHT might be the focus for a future budget.
• In addition, three stamp duty land tax strategies will be shut down, along with various other tax avoidance schemes.
• The introduction of a fair fuel stabiliser is announced as of 6pm today, and the anticipated 5p a litre rise in fuel duty has been delayed for 12 months due to the high price of oil with duty on fuel actually falling by 1%. However, duty will return if oil prices fall back significantly.
• No new regulation on firms with fewer than 10 staff for three years was announced and a business rate relief holiday for small firms was extended for another year.
• The announcement was made to pilot ‘land auctions’ in a bid to stimulate growth by driving down the price of land for development. Under the proposed system, councils would ask landowners to submit sealed bids for the price at which they would be willing to sell the land and the council would then be given the right to buy the land for a certain period. The council would then grant planning permission for the land that they wanted to be developed, and auction it to developers to raise money from the increase of land value.
• The removal of the need to apply for planning permission when converting empty offices and shops into homes. It is estimated relaxing the rules around this ‘change of use’ may potentially free up 266,000 empty units for housing across the UK.
• In terms of the new homes market, the announcement of a Government-backed shared equity scheme to help 10,000 first-time buyers will boost activity within the market.
• The first ten of the 21 Enterprise Zones was announced (in areas including Birmingham, Solihull, Liverpool, Greater Manchester, the Black Country, Derbyshire, Nottinghamshire and London – to be chosen by the Major) which are based on the Thatcher Government’s enterprise zones policy that aimed to boost economic growth by introducing tax breaks and relaxing planning rules.
• An increase in Green Investment Bank to £3bn from 2012-13 may help renewable schemes.