George Osborne’s Autumn Statement: Landlords Lose But House Builders and First Time Buyers Win

Backtracking on the contentious cuts to Working Tax Credits caught the headlines when Chancellor George Osborne delivered his Autumn Budget statement, alongside a boost to house building and good news for first-time buyers.

The Chancellor announced the allocation of £4 trillion of public spending over the next four years, with a £8 billion reduction in borrowing now being forecast and a predicted surplus of £10 billion by 2019-20.

In a package of measures designed to help with housing, Mr Osborne announced a doubling of the housing budget to £2bn a year, to fund 400,000 new affordable homes by the end of the decade, to both buy and rent. Help to Buy has been extended with restrictions removed on shared ownership schemes, so more people can get on the housing ladder. There’s also a new Help to Buy equity loan scheme that will give London buyers 40% of the home value from early 2016, doubling the 20% offered under the current scheme.

But for second home owners and landlords looking to add buy to let properties to their portfolio, the Chancellor dealt another blow by announcing a massive 3% extra levy in land tax stamp duty on such purchases with effect from April 2016. The money raised will be used to fund investment in local communities. This follows on the heels of his last Budget when he announced that there would be a cut in tax relief on mortgage interest for landlords. Tax relief is set to be gradually restricted to the basic rate, currently 20%, where landlords had previously been able to offset mortgage interest against top rates of tax. The shift was to tackle what the Chancellor called an “unfair advantage” for landlords over homeowners.

The Chancellor also announced that people will no longer be able to get cash compensation for minor whiplash claims, in a crackdown designed to cut the number of fraudulent claims and likely to lead to reduced motor insurance premiums. Instead, such injuries are expected to go to the small claims court with the upper claims limit increased from £1,000 to £5,000.

Underused courts will also be closed, saving £700m which will be used towards the introduction of new technology into the court service.

Autumn Statement: business rate relief boost

David Clark, IBB’s Corporate and commercial partner commented:

“As part of a bold plan to rebalance the economy and to devolve power back to local leaders, the Chancellor, in the Autumn Statement, outlined his plans to enable local government to be self-sufficient by the end of the Parliament. By permitting local authorities to retain 100% of business rates, abolishing the uniform rate and allowing them to reduce business rates to stimulate growth, local leaders will be able to take responsibility for driving local growth. Any increase in business rates is only possible if used to fund specific infrastructure projects. In the meantime, many small businesses will continue to benefit from existing reliefs.”

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