Today, George Osborne delivered this year’s Budget.
In response to the Chancellor’s ‘Right to Build’ policy (giving custom builders a right to a plot from councils), the Residential Landlords’ Association has drawn similarities to its small plots proposal and will be submitting a letter to Danny Alexander at the Treasury pressing the case for landlords to be included within the Chancellors proposal.
The RLA also questions how the Government’s review on planning permission will impact RLA members and will seek clarification from the Government.
Below, the RLA have produced a guide focusing on the Budget’s Housing & Welfare Measures.
Housing and Planning
- The Help to Buy: equity loan scheme is expected to help at least 74,000 households buy a new-build home by March 2016. To help a further 120,000 households purchase a home and to continue to support house building as the market improves, the government will extend the equity loan scheme to March 2020. The Help to Buy: mortgage guarantee scheme will continue to support access to high loan to value mortgages until the scheme ends on 31st December 2016.
- To support SME access to finance, the Government will create a £500 million Builders Finance Fund, which will provide loans to developers to unlock 15,000 housing units stalled due to difficulty in accessing finance.
- For people who want to build their own home, the Government will consult on creating a new ‘Right to Build’, giving custom builders a right to a plot from councils, and a £150 million repayable fund to help provide up to 10,000 serviced plots for custom build. The Government will also look to make the Help to Buy equity loan scheme available for custom build.
- The Government will establish a £150 million fund to kick start the regeneration of large housing estates through repayable loans, helping to boost housing supply. Bids will shortly be invited from private sector developers, working with local authorities on estates that might be able to benefit. Following the Autumn Statement, expressions of interest have already been made through the Greater London Authority relating to the Aylesbury Estate, Blackwall Reach and Grahame Park regeneration projects in London.
- The Government will work with the Mayor of London and the Greater London Authority (GLA) to develop proposals for extending the Gospel Oak to Barking Line to Barking Riverside, and to ensure that any public investment unlocks the construction of up to 11,000 new homes. It will also work with the GLA and the London Borough of Barnet to look at proposals for the Brent Cross regeneration scheme, subject to value for money and affordability.
- The Government will support a new Garden City at Ebbsfleet. Ebbsfleet has capacity for up to 15,000 new homes, based on existing brownfield land. To date, under 150 homes have been built on the largest site. The government will form a dedicated Urban Development Corporation for the area, in consultation with local MPs, councils and residents, to drive forward the creation of Ebbsfleet Garden City, and will make up to £200 million of infrastructure funding available to kick start development. This will represent the first new garden city since Welwyn Garden City in 1920.
- The Government will also publish a prospectus by Easter 2014, setting out how local authorities could develop their own, locally-led proposals for bringing forward new garden cities.
- The Government will review the General Permitted Development Order. The refreshed approach is based on a three-tier system to decide the appropriate level of permission, using permitted development rights for small-scale changes, prior approval rights for development requiring consideration of specific issues, and planning permission for the largest scale development. As part of this, the Government will consult on specific change of use measures, including greater flexibilities for change to residential use, for example from warehouses and light industry structures, and allowing businesses greater flexibilities to expand facilities such as car parks and loading bays within existing boundaries, where there is little impact on local communities.
- The Government will shortly consult on the design of a priority ‘Right to Move’ for social tenants to increase their mobility for work-related reasons. Options will include giving such tenants priority when a new social home becomes available, and setting aside a pool of vacant lets to enable them to move across local authority boundaries.
- Public Works Loan Board (PWLB) limit – The Government will take the legal powers needed to increase the current PWLB lending limit of £70 billion to up to £95 billion in future to enable local authorities to continue to borrow from the PWLB.
- The 2013 Spending Round announced that a cap on welfare spending would be introduced. Budget 2014 caps welfare spending in scope for the years 2015-16 to 2018-19 at the level of the Office for Budget Responsibility’s forecasts, as published in the OBR’s March 2014, ‘Economic and fiscal outlook’.
- Details of the welfare cap can be found below and a forecast margin of 2% above this level will ensure that policy action is not triggered by small fluctuations in the forecast, but will not allow for discretionary policy action which breaches the level of the cap.
|Forecast Margin (2%)||2.4||2.4||2.5||2.5|
- The welfare cap will be included in the ‘Charter for Budget Responsibility’ alongside the fiscal mandate. An updated ‘Charter for Budget Responsibility’ and motion for approval was laid before Parliament on 19th March 2014. The OBR will make its first assessment of performance at Autumn Statement 2014.
- As set out at Autumn Statement 2013, the cap will apply to all welfare spending with the exception of the state pension and the automatic stabilisers. In future, any new lines of spending that fall within the OBR’s social security or personal tax credits forecasts and impact upon Public Sector Current Expenditure (PSCE) will be presumed to be included within the cap. As set out in the modified ‘Charter for Budget Responsibility’ laid before the House of Commons, any subsequent changes to that list must be voted on.
- Budget 2014 predicts that on current plans, Universal Credit will be fully available in each part of Great Britain during 2016.
Capital Gains Tax
- Non-residents – As announced at Autumn Statement 2013, the Government will introduce CGT on future gains made by non-residents disposing of UK residential property from April 2015. A consultation on how best to introduce the charge will be published shortly.
- Private residence relief – As announced at Autumn Statement 2013, the Government will legislate to reduce the final period exemption from 36 months to 18 months in most cases from 6 April 2014.
- Annual exempt amount – As announced at Autumn Statement 2012, the Government will increase the annual exempt amount by 1% for 2 years to £11,000 in 2014-15 and £11,100 in 2015-16.
- Business asset roll-over relief – The Government will include payment entitlements under the new agricultural subsidy Basic Payment Scheme within the business asset roll-over relief classes of qualifying assets.
- Capital gains remittances and split years – The Government will correct an oversight in the split year rules that were introduced as part of the Statutory Residence Test legislated in Finance Act 2013. This will ensure that capital gains made by a remittance basis user in the overseas part of a split year of residence are not charged to tax.
- Trusts with vulnerable beneficiaries – As announced at Autumn Statement 2013, the Government will extend from 5th December 2013 the CGT uplift provisions that apply on the death of a vulnerable beneficiary. From 2014-15 the range of trusts that qualify for special income tax, CGT and Inheritance Tax treatment will also be extended.
Other Property Taxes
- Enveloping of residential property – The government will introduce two new bands for the Annual Tax on Enveloped Dwellings (ATED). Residential properties worth over £1 million and up to £2 million will be brought into the charge with effect from 1 April 2015. The charge for these properties in 2015-16 will be £7,000. Properties worth over £500,000 and up to £1 million will be brought into the charge with effect from 1 April 2016. The charge for these properties in 2016-17 will be £3,500. These charges will be increased by CPI each year.
- The Government will also extend the 15% Stamp Duty Land Tax (SDLT) rate applied to residential properties purchased by certain non-natural persons to properties purchased for over £500,000 with effect from 20th March 2014. The government will extend the related CGT charge on disposals of properties liable to ATED for residential properties worth over £1 million and up to £2 million with effect from 6 April 2015 and for residential properties worth over £500,000 and up to £1 million with effect from 6 April 2016. The government will consult over summer 2014 on possible options to simplify the administration of ATED.
- Application of SDLT on certain authorised property funds – As part of the Investment Management Strategy, the Government will consult on the SDLT treatment of the seeding of property authorised investment funds and the wider SDLT treatment of co-ownership authorised contractual schemes.
Fuel Poverty and Energy Efficiency
- The Government will shortly be publishing its proposals for a new fuel poverty target and strategy and as part of this will consider the particular challenges faced by those households that are not connected to the gas grid.
- At Budget 2013 the government committed to implement ‘zero carbon homes’ from 2016. The Government will shortly publish its response to last year’s consultation.
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