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Latest Autumn Statement: evergreen or deciduous?

29 January 2014

On 5 December, The Chancellor, George Osborne delivered the government's Autumn Statement. Many of the proposals will have a significant impact on the residential market and regeneration sector…if they're here to stay.

Is £1 billion enough?

The government will issue £1 billion in loans through a six-year programme targeted at infrastructure to support large housing developments. The programme is intended to help deliver around 250,000 homes and is due to commence in 2014-2015. The Chancellor referred to schemes in Manchester and Leeds, and it seems the focus lies on areas outside London.

Or just a drop in the ocean?

The proposal has had a mixed reception - while the additional £1 billion is welcome and should assist housing development across the country, thereby reducing the housing deficit and driving construction jobs, some analysts believe this will only have a minor effect. With the nation estimated to need around 200,000 homes a year to keep pace with demand, the announcement could amount to little more than a drop in the ocean.   

Non-UK residents cough up more capital gains tax

From April 2015, overseas owners of UK property will be required to pay capital gains tax on profits from the sale of homes that are not their primary residence. This change will make investing in residential property less appealing to foreign investors, particularly following the recent increases in stamp duty land tax rates and with the looming 'mansion tax' still not ruled out by the government.

Just a political ploy?

Again, this has received a mixed response from the property industry. Some see the change as being more of a political move with an eye on the next general election in 2015. It is understood that the proposed change is set to raise less than £100 million.

Other commentators argue that it will only have a marginal impact on demand and pricing (particularly in London), citing that the move will bring the UK into line with other key investor markets, such as New York and Paris.   

Help to Buy has staying power

Many believe the increase in housebuilding (up by 29% compared to this time last year) is a direct result of Help to Buy and there are some fears that it may eventually overheat the market. However, Mr Osborne has resisted such fears arguing that "it's not enough to build more houses if families can't afford the deposit".

Affordable homes hot on the agenda

The Chancellor confirmed that he plans to increase the funding available for new affordable homes by raising the borrowing limits on local authorities' housing revenue accounts by £150 million in 2015-16 and £150 million in 2016-17. This funding should support a further 10,000 affordable homes.

In addition, local authorities will be forced to sell expensive social housing properties to build more homes. We are yet to receive any details about this initiative, but will provide an update once it's clear how it will work in practice. 

Keep watching the forest

Although the Autumn Statement contains mixed news for developers and housebuilders, at this stage they are simply statements of intent and are a good indicator of likely policies for the remainder of the decade - if the conservatives win the 2015 election. So at the moment, it's very much a case of 'watch the forest' as the proposals either take hold or wither away.