Tune into this Labour Watch blog to keep up to date as more detail is released on the new Government’s policies over the coming weeks and months.
Wednesday 30 October – Budget update 17:30
The highly anticipated Autumn Budget was delivered by the Chancellor Rachel Reeves in the House of Commons today. Read our commentary on how it impacts property and infrastructure here.
Wednesday 30 October 2024 – Budget
Some 16 weeks after coming to power, the Chancellor will today finally deliver her first Budget.
Speculation has been rife about what the Government has been planning in terms of tax changes, with many stories in the press that seem ‘well sourced’.
The raft of information emerging before the Budget culminated in the Chancellor being reprimanded by the Speaker of the House of Commons for talking about debt rules in the US at a meeting of the International Monetary Fund (IMF). Sir Lindsay Hoyle said that her revelation that the Government would change the way they measure debt was a major new policy announcement, and as such should be announced in Parliament first where it can be properly scrutinised.
Even with all the opinions about what might be announced today, nothing will be certain until after the Chancellor’s speech and after the full Budget report is published.
But here is an outline on some of the main issues she may cover:
- Fiscal rules – Ms Reeves has already alluded to changing the debt rules which will make a difference to the headroom she has for tax and spending
- Tax changes – There has been a lot of discussion about what a ‘working person’ is – as the Labour manifesto pledged not to raised taxes for working people, including National Insurance, income tax or VAT.
However there has been conjecture that employers’ national insurance might be raised. Likewise, it is expected that the Chancellor could raise other taxes, such as Capital Gains Tax (CGT) – although there were denials from Government sources earlier this month that this would not be raised on second homes (the rate is currently 24%) or investment properties. Inheritance tax and associated reliefs for business property and agricultural land may also be changed – or a consultation around this may be launched - Business rates – The Government has pledged to overhaul this system of business rates. There may be more information on this in the Budget documents
- Fuel duty – could look again at the freeze on fuel duty escalator – to encourage move to electric vehicles
- 5G and gigabit broadband – there may be more information on the Government’s approach to speed up progress to meet target for full roll-out by 2030
- Affordable housing – more funding to deliver affordable homes across the UK
- Minimum Energy Efficiency Standard (MEES) – there may be more detail on plans for EPCs and deadlines for residential and commercial landlords and owners.
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Wednesday 21 July 2024
The much-anticipated draft National Planning Policy Framework (NPPF) landed yesterday, and it didn’t disappoint in terms of big changes.
The new Government have pledged to build 1.5 million homes over the next five years, and as we said in our election blog, they needed to deliver sweeping changes, and do it quickly in order to make this happen. I spoke to Andy McMullan, Director at Broadgrove, our strategic planning partners, about his views on the new draft below around housing. The draft framework is also set to make it easier to get digital infrastructure, including data centres and electricity network grid connections through planning, which is examined below.
The consultation on the draft NPPF will close on 24 September, and the Government aims for it to be adopted by the end of this year.
First – the background:
Where are we now with housebuilding?
In 2022-23, some 234,000 net additional dwellings were delivered in England. This was made up of 213,000 new-build homes, 22,000 change of use from non-domestic use (offices etc) to residential and 5,000 other conversions, as well as 5,470 demolitions. This number is likely to have fallen in the year to April 2024. The official figures will be released in November.
What is the new target?
The Government will need to deliver 300,000 homes a year on average over the next five years to hit the 1.5 million target.
Why is the NPPF important?
This is the framework that outlines for English Local Authorities how many homes they the need to deliver, and the rules around where these homes can be, what tenure they should be (private homeownership, affordable rented etc) and also outlines broad guidelines for design (‘beautiful homes’ in the previous NPPF has been replaced by ‘well designed’).
Andy McMullan says: “The new Government have certainly followed through on many of their statements ahead of the election in this draft NPPF. This is probably the most dramatic set of proposals seen in a generation”.
So what are the key changes in the draft NPPF?
The devil is in the detail of the draft NPPF, but here is an overview of the major changes:
- Huge uplift in housing targets
The draft framework outlines calculations that would seek to deliver 370,000 homes a year across England. This means that in some cases, there are very large rises in the housing delivery targets for local authorities. This has been achieved by changing the way these targets are calculated, and the targets are mandatory. The overall target for London has fallen however.
Local Authorities (LA) who miss their delivery targets move to a different landscape for development, in that they must adopt ‘a presumption in favour of sustainable development’. What this means is that land and sites that have not be allocated or identified by the LA can be put forward for development, and there should be a presumption in favour of them being supported.
- Local Authorities must deliver a local plan, and a 5-year land supply
Every LA must have a local plan (which outlines where development will be placed) which delivers the number of homes outlined in the housing targets. Some LAs do not have a current local plan at present, and the most recent NPPF said that housing targets were advisory only. Angela Rayner, the Deputy Prime Minister and the Secretary of State for Housing, Communities and Local Government, has said that where there is no local plan, she will intervene.
- Freeing up parts of the Green Belt for development
In recent years, and decades, LAs which are in the Green Belt or have some element of Green Belt within their boundary have been able to use this as a reason not to meet their housing targets, as development on the Green Belt was largely not allowed. However, under the new draft framework, LAs must examine their Green Belt for ‘Grey Belt’ sites – previously used or developed land that would suit development that sits within the Green Belt. In addition, it includes land that makes a “limited contribution” to Green Belt purposes. All sites in the Grey Belt will need to deliver 50% Affordable Housing and infrastructure such as schools and GP surgeries.
The purpose of the Green Belt is to control urban growth, and maintain open green land at the edges of cities and towns to prevent urban sprawl, and to protect historic towns. It is also deemed important to provide access to the open countryside for city residents. Around 13% of the land area in England is designated as Green Belt.
Andy McMullan says: “These are huge changes in housing targets in some Local Authority areas, and around the green belt, which will mean land not currently in the pipeline for development could come into play very quickly. One thing we would highlight however, is that to get all these changes made, the planning teams at local authorities will need much more resource..
“Where a LA does not have an up to date Local Plan, a five-year land supply or is unable to demonstrate it is delivering against its housing targets then it is highly likely that it will lead to lots of speculative development coming forward – with a presumption in favour of development. We would strongly recommend that you engage with us now to assess the impacts and opportunities that the draft NPPF creates for your land and buildings.”
Other key points in the draft NPPF highlighted that the Government wants to priorities clean energy and infrastructure.
- Support through planning system for key industries including Gigafactories and Digital Infrastructure including data centres, and electricity network grid connections
Ms Rayner recently called back two planning applications for data centres in the green belt to review them – signalling that alongside the draft NPPF, she is committed to stepping up the UK’s digital capacity. The draft NPPF says that digital infrastructure “drives growth across the economy by connecting businesses and public services thereby enabling them to be more efficient and productive. As such, local plans must identify “appropriate sites” for these types of development, as well as freight & logistics and laboratories.
If you would like to contact Andy McMullan and the Broadgrove team about planning issues, follow this link.
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Tuesday 30 July 2024
The new Government are out of the blocks, with the Chancellor Rachel Reeves outlining some immediate changes as she explained that there was a £22 billion deficit in the country’s finances.
The immediate measures outlined by the Chancellor yesterday, such as cutting winter fuel allowances for pensioners not receiving benefits, and scrapping the planned capping of social care costs at £86,000, VAT on private school fees starting in January 2025, were a way of starting to balance the books.
It came with some giveaways too – a 22% pay rise for junior doctors over two years and a 5.5% increase for NHS workers and teachers and 5% for other sectors.
In a separate statement, the Government confirmed it would push ahead with reforms of the non-dom rules, which currently allow those not resident in the UK for tax purposes to shield their worldwide assets from UK tax for 15 years. From April next year, the Government will introduce a residence-based system which will last for four years. Offshore assets will also be liable for inheritance tax if someone has been resident in the UK for 10 years before the ‘chargeable event’.
The main purpose of Ms Reeves’ statement yesterday was to prepare the way for “difficult decisions” on tax (read: tax rises) in the Autumn Budget which will take place on 30 October.
While the government has pledged not to raise income tax, VAT or National Insurance, this does not preclude leaving thresholds unchanged for longer – meaning more people move into higher tax brackets and the Treasury recoups more money.
The new Government has been relatively quiet about Capital Gains Tax (CGT), leading some to suggest that a rise in tax rates could be on the way. Currently CGT is charged at 20%, except for residential property (not a main residence) when it is charged at 24% and there is also a 10% rate for SMEs and entrepreneurs.
The Government has already asked private equity firms and other parties to share information by 30 August as it seeks to reform ‘carried interest’ for investment managers, when CGT is charged at 28%. An announcement is expected in the budget.
Any change in CGT for residential property would have an impact on residential landlords, as they would have to factor in this additional tax on any gains they make when selling their rental property.
There has also been speculation that Inheritance Tax (IHT) rates could be increased. Currently it is charged at 40% on estates of more than £325,000 (or up to £500,000 on a home left to children).
Also – the relationship between CGT and IHT on assets could be revised. Currently someone’s assets when they die are liable for IHT rather than CGT on the uplift of the value of the asset. Any change to IHT could prompt older homeowners to review their plans for the future.
More changes to stamp duty can’t be ruled out at the budget in October. Last year this tax on property sales raised around £11 billion.
- Next up today (Tuesday 30 July) is a statement from Angela Rayner, the Secretary of State for Housing, Communities and Local Government, along with a new draft National Planning Policy Framework (NPPF) outlining more detail of how the Government intends to fulfil its promise of building 1.5 million homes over the next Parliament.
- The draft NPPF may also outline steps on speeding up the roll out of key infrastructure to ensure the UK’s economic growth – energy and digital connectivity
- Keep tuned here for updates on this, and all policy announcements in the coming weeks.
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Friday 5 July 2024
With talk of a general election being a hot topic for much of 2024, Cluttons has kept a keen eye on all the activity taking place.
Over the last couple of months we have been providing regular updates in our Election Watch blog to keep you up to date on the policies and the manifestos of the main parties as they were released.
And now with a Labour Prime Minister in place, our director of research & insights Gráinne Gilmore, gives her initial reaction on what this new Government means for property.
Tune into this Labour Watch blog to keep up to date as more detail is released on the new Government’s policies over the coming weeks and months.
The information provided in this report is the sole property of Cluttons LLP and provides basic information and not legal advice. It must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of Cluttons LLP. The information contained in this report has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accuracy of this information. Cluttons LLP does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication.
Election watch: UK property & infrastructure
Housing will be a key issue for the main political parties in the run up to the General Election, with a YouGov poll on April 1st showing it is the fourth most important issue for voters, after immigration, health and the economy.
