In the “Mini-Budget 2022” delivered on 23 September 2022, the government announced a tranche of new measures with a view to stimulating growth in the UK economy, a number of which are focused on the property sector and which many in the property industry are seeing as the most radical government-imposed measures in recent history. This article focuses on those measures and how they may affect the property market in the coming months and years.
First, immediately following the budget, the threshold from which Stamp Duty Land Tax must be paid has been doubled to £250,000 for all home purchases. Many are saying that this could result in as many as 200,000 people, who are currently seeking to buy, no longer needing to pay Stamp Duty Land Tax altogether. Also, the threshold at which first-time buyers begin to pay SDLT has increased from £300,000 to £425,000, and the maximum value of a property on which first-time buyers’ relief can be claimed has increased from £500,000 to £625,000.
The government is also planning to set up new “Investment Zones” in various places across the UK (currently 38 areas are being considered) where taxing and regulation will be reduced compared to the rest of the UK. Companies investing in these areas will receive tax incentives and planning laws will be relaxed. We understand the following will be introduced in these zones, although this is a non-exhaustive list:
Stamp Duty Land Tax and Business Rate Relief: no Stamp Duty Land Tax will be payable by investors purchasing land and buildings for new residential development in the Investment Zones, and 100% business rate relief will be available for such investors.
First Year Capital Allowance: There will be a 100% first-year enhanced capital allowance relief for plant and machinery used within designated sites.
Enhanced Structures and Buildings Allowance relief: Enhanced Structures and Buildings Allowance relief of 20% per year will be available against the cost of qualifying non-residential investment.
The Government has also stated that it is intending to release large parcels of land for development across the UK by “simplifying and streamlining the planning process” to avoid the delays that have clogged up the planning system in the post-pandemic market. A Government Bill is expected in the coming months that will set out these measures in more detail.
In implementing the measures, the Government is very keen to stimulate the property market, which is seen as one of the cornerstones of the UK economy, with a clear focus on housebuilding and development to increase the number of houses available. When the Government introduced the Stamp Duty Land Tax Holiday in 2020 in response to the Covid-19 pandemic, homeowners saw the value of their properties soar as buyers rushed to take advantage of the tax cuts. Property prices have continued to rise at an extraordinary rate over the past two years, with more people moving away from cities into rural areas as working practices continue to evolve. However, with property market forecasts being more modest over the coming 12-18 months, it remains to be seen whether these tax cuts will have the desired outcome for the Government i.e., stimulating enough growth to produce the revenue the Government anticipates to cover the cost of the tax cuts.
We hope this article was interesting and useful to you – please don’t hesitate to contact us if you have any questions regarding the content of the article or your property matters generally. We would be delighted to help.
You can contact our Commercial Property Team via the details below: -
Wokingham - 0118 980 0099
Reading - 0118 957 3425
Farnham - 01252 733 733