Budget 2015: Statement without intent
Budget 2015 was always going to paint the rosiest picture possible with the looming spectre of the general election (there's one on the way, in case you hadn't heard), writes Stuart Stead.
So focus was inevitably going to fall on the vaunted Northern Powerhouse and increasing homes and potential for first-time home buyers.
So, to borrow his favourite metaphor, the sun was indeed shining as Osborne announced planning approval and housing start levels are at a seven-year high with more than 537,000 homes having been built over the course of the latest parliament. There was also the announcement of over 400 local projects agreed through Growth Deals to begin in 2015 and the headline grabbing Help to Buy ISA which provided some welcome stimulation to the market as part of the projected £24bn investment in affordable housing.
The government has also committed to releasing land with capacity for up to 150,000 homes between 2015 and 2020 as part of a scheme to create a more commercial approach to dealing with the central government estate.
However, outside of political point scoring, there was little to take away from this government's last Budget if you're a developer or investor.
A new soundbite in the Budget of no soundbites was 'the sharing economy' which covered a range of elements to be tested in Greater Manchester as well as other areas. Included within these proposals for the public good was an interesting segment for investors in the private rental sector, related to the government's plan to make it easier for individuals to sub-let a room. Effectively, if you're an investor in the PRS market, expect to see legislation appear soon which will prevent the use of clauses in private fixed-term residential tenancy agreements that expressly rule out sub-letting.
As well as denying entrepreneurs' relief on so called 'contrived structures' such as companies that aren't trading in their own right, there was confirmation following a successful consultation that non-UK residents and certain bodies would be subject to Capital Gains Tax on disposal of UK residential property. As announced last year, the government will also extend the related CGT charges for properties with ATED liability. This will apply from next month for properties worth between £1m and £2m and April 2016 for properties in the £500,000 – £1m bracket.
There was also confirmation that the proposed extension of SDLT multiple dwellings relief to include "lease and leaseback" arrangements will go ahead as planned, something that I covered at length following the Autumn Statement.
All in all, nothing to shout about. Indeed, for those of us witnessing and involved in the recovery of the North West property market on a daily basis, there has to be palpable disappointment with this Budget.
Despite their continuing support of first-time buyers and the potential stimulation for SME growth via the changes to business rates, this government has focussed on the headlines and the punchlines (such as Miliband's dual kitchen arrangement) without showing any intent to truly stimulate the commercial and residential investment market. As an important driver for growth in areas at the hub of the coalition's Northern Powerhouse, this could prove to be an unpopular oversight.
- Stuart Stead is partner and head of property and construction at Cowgill Holloway