In my last piece for 2015, here are some things to watch out for in 2016.
From a tax perspective, the government will continue to crack down on perceived tax avoidance, although this should not prevent non-aggressive tax planning. The Project Blue appeal concerning the acquisition of Chelsea Barracks will be heard in May. Neither HMRC nor the taxpayer were satisfied with the last ruling, and with millions of pounds of SDLT riding on the decision this case will be watched with interest.
Elsewhere, the introduction of increased SDLT on second homes and buy-to-let properties will lead to further discontent among those renting homes as the extra costs will inevitably be passed on to tenants. And the much-anticipated review on business rates to be published next year should hopefully drag the current business rates system into the 21st century.
Eighteen new enterprise zones have been announced and existing zones are to be extended from April 2016. Companies in designated assisted areas will benefit from reduced business rates and be entitled to a 100% first-year allowance for expenditure on plant and machinery. This initiative should help much-needed investment in these areas.
On planning, the government is pushing forward with housing ownership plans. The Housing & Planning Bill will mean residential developers will have to provide a proportion of homes for sale to first-time buyers at a discount of 20% up to a price cap of £450,000 in London and £250,000 elsewhere. Although this will probably count towards the developer’s obligation to provide affordable housing, the devil will be in the detail.
The bill also encourages housing development on brownfield sites. Local authorities will compile a register of brownfield land suitable for resi development. Developers will still have to seek “technical details consent” for each site, the mechanism for which has not yet been published. On the whole, this looks to be good news, but again we will need to see the detail.
And in terms of housing, up to 500 units will be allowed to be included in Nationally Significant Infrastructure Projects (NSIPs) where there is a “functional need” for homes or where they are “functionally linked” to the intended infrastructure. Whether it is worthwhile for housebuilders to go through the NSIP process for the sake of 500 homes is debatable. On the plus side, they could benefit from centrally taken decisions by the communities secretary and the development consent orders regime.
The government has also announced an extension of permitted development rights. All good common sense, but what limits will be placed on the change of use?
And finally Brexit: what will happen to real estate if we exit from the European Union? Most businesses (according to a recent survey undertaken by my firm) feel there will be a negative impact on property. But which way will the vote go?
Next year looks set to be very interesting. Happy New Year.
Rob Thompson is London head of real estate at Irwin Mitchell