Posted: Thursday, 31 March 2011 @ 13:08
Budget 2011 – Property
Now that the dust has settled after the Budget Report last week it would be a good time to summarise the main implications for the property world.
The temporary increase in small business rate relief has been extended by a further year to October 2012
This means that eligible businesses occupying one property with a rateable value of £6,000 or less will pay no business rates for that period. For properties with a rateable value of between £6,000 and £12,000 there will be relief on a sliding scale from 100% to zero.
All SME’s entitled to this relief should contact their local authority to make a claim as this is not given automatically.
The current planning system is slow, expensive and bureaucratic. The following changes have therefore been proposed:
• A “presumption in favour of sustainable development” irrespective of local plans. Whilst this is welcome news it will be interesting to see how this works in practice given the previous stated aim to devolve decisions locally. The initial reaction is that in future it will be more difficult for neighbours and councils to oppose planning applications as the priority will be growth and jobs. More details will follow in May.
• Planning permission would no longer be required for change from commercial use to residential.
• A new strict time limit of 12 months for processing all planning applications, including any appeals.
Stamp Duty Land Tax
With immediate effect action has been taken to stop popular schemes used to mitigate the amount of Stamp Duty payable on the purchase of property. Primarily this involves the use of alternative finance relief that was originally designed for Islamic finance and exchanges of land.
A further review of other avoidance schemes will not be completed until at least January 2012
Developers will note the scheme to help first-time buyers by providing a 20% deposit to be funded equally by the Government and the house builder.
In order to take part developers will need to apply to the Department of Communities and Local Government to offer First Buy on specific developments.
The main criticism is that only 10,000 will benefit from the scheme so it is too small to have a major impact.
In the past a major deterrent for investors looking to buy property in bulk was they would be defined as “linked transactions”. In effect on these transactions the rate of Stamp Duty would usually be 4% as it would be calculated on the aggregate purchase price for all properties bought from the same seller.
The change will mean Stamp Duty being charged on the average price per property subject to a minimum charge of 1%
There is a likely to be a pilot land auction scheme in order to increase the amount of land available for development. Councils will be encouraged to auction planning permission on land owned by either the public sector of private landowners.
The way in which it is expected to work is for landowners to submit a binding price at which they would be willing, for a fixed period of time, to sell a plot of land.
The council would then have the option to buy that piece of land at the agreed price and to grant planning permission, as appropriate. The land would then be auctioned by the local authority to interested developers and the council would keep any increase in the final sale price.
Public Sector Land
Changes are likely to mean more new houses being built on disused land belonging to public bodies such as the NHS, for example. Separately developers may only have to pay for this land when the constructed houses are sold.
21 new enterprise zones are to be created to help in areas where regeneration is a priority. This will offer a number of benefits including 100% discount on business rates for any company moving into a designated zone and a simplified planning regime.
The cost to SME’s of complying with various UK and EU regulations has been recognised and a further review will take place to find ways in which the burden can be reduced. The areas to be looked at are health & safety; construction; the Equality Act, local authority contracts and money laundering offences.
Business Premises Renovation Allowance
The Government has announced that it will extend the business premises renovation allowance for a further five years from 11 April 2012.
Commercial Property Solicitor
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