Comment: The Autumn Statement should pause Capital Gains Tax on land sales and kick start house building
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Estate agent Simon Gerrard lays out his suggestions for Philip Hammond’s first Autumn Statement next week.
It’s coming up to Budget day again when all our thoughts turn to what the Chancellor can be doing to help property owners, renters and developers. This year the picture is even more interesting as Gavin Barwell, the Housing and Planning Minister has confirmed that there will be a Housing White Paper this autumn, further outlining government policy in this area.
My hope is that the government cuts to the heart of the matter and helps kick start housing supply. With this aim in mind, there is one simple measure the government could implement that would ensure the housing market is fighting fit in 2017 and into the future.
We are all acutely aware of the lack of supply of decent housing across the UK. This situation causes a whole range of knock-on effects: spiralling rents, lack of choice for first time buyers and unnecessary price inflation to name a few.
For too long government policy has focused on the demand side and looked at what help buyers can be given to get them onto the housing ladder. While these policies have helped, they ignore the fundamentals of the market and don’t get right to the heart of the matter and tackle the issue of supply.
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Never has the old adage ‘buy land, they’re not making it anymore’ been more true. Land owners know that the value of their asset will go up and up. They currently have no reason or incentive to sell and release the asset for development.
Even the government’s own attempts to release land for housing have failed. The Public Accounts Committee recently reported that government departments had achieved only 5 per cent of the target set for the sale of government-owned land for house building.
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A more innovative approach must now be adopted to unblock the development pipeline at source. The government needs to launch a moratorium on Capital Gains Tax (CGT) for land being sold, for a defined period of time. In one quick move, the government will have given landowners across the country an immediate incentive to cash in on their land. Yes, the Treasury will take a short term hit in terms of tax take but the outcome will be priceless: lots of land released for development.
The move would not only help private housing but would ultimately also increase the availability of social housing. With a snap increase in land coming to market, prices would no doubt soften, lowering the cost to developers and will make them far more accommodating to the social housing demands of the local authorities.
The government’s pledge of £2billion to fund an Accelerated Construction Scheme and set up a £3billion homebuilding fund are all well and good but without tackling the key issue of land supply, these merely patch up the patient as opposed to give it the shot in the arm that it actually needs.
While I wait to see what the government’s next move will be, in our north London market the news is good. The market fundamentals are still strong as activity recovers after the June hiatus. We are seeing the annual rush to get deals closed in the run up to Christmas, and I am also hearing from lots of sellers who are getting their properties ready for sale in the New Year.
It has been an unprecedented week on the international stage and it is always fascinating to see how global politics filters down to the London property market. More often than not, changes at a global level tend to impact positively on the London market and I expect that the US election result will be no different.
We are also seeing a rise in French buyers concerned about the political situation in their home country and we expect to see an influx of US buyers looking for a safe haven to park their capital. Perhaps the recent arrival of Justin Bieber to rent a property in north London weeks before the Presidential election result meant he knew something the pollsters didn’t!