Phillip Hammond has delivered his first Autumn Statement, tackling amongst other things, what he called “the housing challenge.”
The speech made no reference to stamp duty, nor to George Osborne’s buy to let tax reforms despite substantial lobbying from the agency industry; it is assumed that these remain unchanged.
Aside from a ban on lettings fees levied on tenants - of which more later - the biggest property-related announcement in the statement was for new housing.
“We’ve made good progress on the number of new homes” said Hammond, ahead of his announcement that in addition to the already-agreed £3 billion Home Builders Fund he would launch:
- a £1.4 billion funding injection aimed at funding the construction of around 40,000 additional affordable homes by 2020/21;
- a £2.3 billion fund to “unlock land” for housing in areas of highest demand with the most expensive homes;
- relax planning regulations to allow what the Chancellor called “providers’ to build a wider range of new-build homes;
- specifically for London, Hammond said there would be an additional £3 billion for a predicted 90,000 affordable homes.
The Chancellor also confirmed that there would be a housing White Paper coming from the Department of Communities and Local Government - but no date has been given for its arrival, and some political analysts have suggested that this means it is delayed beyond its expected target of being issued before the end of this year.
Hammond described this package of proposals as delivering “a step change in our ambition to increase our supply of homes for sale and for rent.”
There was also an announcement that there would be a review into incorporation and tax paid as a result: no details were given, but this may be a challenge to landlords who have gone down the route of setting up companies for their buy to let properties in a bid to combat the restrictions on mortgage interest tax relief being introduced from April 2017.
Towards the end of his speech, Hammond confirmed the move on banning letting agents’ fees levied on private rental sector tenants in England. The government says this will apply to some 4.3m tenants, saving a government estimate of £337 in fees for each tenant.
“Letting agents are currently able to charge unregulated fees to tenants” said Hammond, who described the most excessive fees as “wrong.” He said this ban would come into effect “as soon as possible” - likely to be after a consultation period.
The rest of the Autumn Statement includes these measures:
- three new ‘fiscal rules’ suggesting the deficit will not be paid down until 2025, with tax revenues lower than expected;
- corporation tax to fall to 17%; the lowest corporate tax in the G20;
- Insurance Premium tax up from 10% to 12% in June 2017;
- no further welfare spending savings in this parliament;
- National Living Wage to rise to £7.50 from April 2017;
- £740m for the development of 5G and the continued roll-out of fine-optic connections;
- £2 billion annually for research and development funding from 2021;
- fuel duty rise cancelled for the seventh successive year;
- reform of compensation for whiplash to be limited to ease pressure on motor insurance;
- future Autumn Statements abolished, so from autumn 2017 there will be only one annual Budget.