It will be interesting to see the Chancellor’s approach to simplifying the planning process for property development. Sajid Javid could reinvigorate UK house-building by freeing up more areas of green belt land. Investing in planning departments to try and get closer to house-building targets is of great importance. We are currently well short of annual house building targets and this is contributing to higher house prices in certain areas. Again, the majority of respondents to our survey agreed that this approach would be assist achieve house building targets.
The recent Queen’s Speech promise to make changes to business rates is long overdue and will be welcome, particularly by retailers on the high street.
A stable and competitive tax system is vital. There have been too many changes in recent years and these have negatively affected the market. We need a period of tax stability. In particular, the UK tax system for the property sector has become increasingly complex in recent years and any simplification would be welcome.
Furthermore, recent tax changes are driving private buy to let landlords out of the market; the Government should consider whether this is really increasing the supply of properties for first time buyers.
Stamp Duty Land Tax (SDLT) has consistently been perceived by the industry as the biggest tax barrier to real estate businesses. This is particularly the case in the residential market where reductions at the top-end would be widely welcomed. This would free-up liquidity in the market, which will ultimately increase housing transactions and sales. We may even find that it raises more money in the longer-term. Two thirds of respondents to our recent property and construction survey stated the government’s fiscal policies were bad for the real estate industry, with SDLT being the biggest concern over 48% and tax complexity being 36%%.
With a manifesto pledge to place a 3% SDLT surcharge for overseas buyers, it looks likely that for some purchasers SDLT will continue to be a rising barrier for entry into the UK property market. The PM has also previously mooted reforming the SDLT system by either raising the threshold or lowering the rate. As a transactional taxes, SDLT is a drag on the liquidity of the property market. In our property survey, it remains the most significant tax barrier identified by the property industry. Reforming SDLT and its rates would be welcomed by all.
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