Autumn Statement 2016: How will it affect the property market?

This Wednesday we saw Philip Hammond’s first and last Autumn statement. So what does the statement mean for the property industry? Deverell Smith have asked a selected panel of our clients for their opinion and to provide their insight on what policies the Statement sets out for the UK property industry and how this will affect the industry in the future.


Tim Hyatt, Proprietary Partner, Head of Lettings for Knight Frank LLP

“The private rented sector forms an important part of the UK housing market and the engagement from the chancellor in today’s Autumn statement is a welcome sign that it is recognised as such. Letting residential property is a highly-regulated activity and as with any reform a review of the detail will be important. We have long supported the regulation of lettings agents which will entrench best practice across the sector, and we believe that measures to improve the position of tenants should be introduced in a way that supports the growing professionalism of the sector. With a rising number of regulations and legislation governing the sector it is important that the role of qualified, well trained and regulated lettings agents is recognised and the need for fees to cover their work to protect both tenants and landlords is understood.”


Chris Day, Global Managing Director for Christie & Co

“Following the Chancellor’s recent Autumn Statement the funding of local infrastructure will improve transport connections, unlock house building, boost skills, and enhance digital connectivity. This is positive news for UK Business owners. Conversely the change to rating transitional relief will help but will still mean that business owners can see huge hikes in their bills before the ceiling to ease the pain kicks in. Increases in the national living wage will be the equivalent of a pay rise worth over £500 a year to a full-time worker. This will impact owners of businesses in Care, Hotels, Pubs & Restaurants and Childcare resulting in lower margins and reduced profitability. More positively the main rate of corporation tax has already been cut from 28% in 2010 to 20%, and will be cut again to 17% by 2020, by far the lowest in the G20 and is likely to benefit over 1 million UK businesses.”


Ruth Barnes, Partner, Head of Department – Residential Development Sales for Winckworth Sherwood LLP

“Whilst the much hyped Housing White Paper is eagerly awaited with reforms aimed at “increasing housing supply and halting the decline of affordability”, as the Redfern Report identifies, there are many factors contributing to our “housing challenge” and there is unlikely to be a single “white” bullet.. As always the devil will be in the detail.

The Housing Infrastructure Fund is welcome news. It will be interesting to see the criteria to be applied on a competitive basis and if indeed the fund will benefit the areas where it is most needed. There is an intrinsic link between housing and infrastructure and if Government gets this right this fund, as part of the National Productivity Investment Fund with its transport, digital communications and research and development improvement goals, will undoubtedly help the sector develop, create stability and encourage long term planning.

Good news for Housing Associations with “£1.4 billion extra capital grant from central government to fund 40,000 new homes” set to reinvigorate the development of affordable rented homes although OBR forecasts suggest that there may be reduction in shared ownership in favour of affordable rent and rent-to-buy as a result of the introduction of tenure flexibility across the Affordable Homes Programme.”


Gary Murphy, Partner, Head of Residential Auctions for Allsop LLP

“There was hope that, with a new Prime Minister and Chancellor in place, a review of stamp duty measures would be announced in this week’s Autumn Statement to help stimulate the property market. But, despite calls for a cut in stamp duty, the industry is once again left disappointed. The stamp duty surcharge has stalled the prime market, which has had a ripple effect on transactions lower down the housing ladder. News that there is a £9.5bn fall in stamp duty receipts adds fuel to the fire and the debate to review the levy will undoubtedly continue.

“However, although the market has cooled since the reform was introduced, the view from the rostrum remains one of a busy room of buyers who still have no hesitation in bidding for sensibly priced assets where they see an opportunity. A combination of low interest rates, an engrained affection for property in the UK’s psyche and a history of strong capital growth on residential investments means that the demand is still there. While some are considering commercial property investment as an alternative because of its friendlier tax regime, residential remains a more approachable, easily understood and more trusted investment for many.” 

Debra Yudolph, Partner SAY Property Consulting LLP

The government has made a commitment to spend £3.7bn on addressing the housing crisis. £2bn a year for infrastructure will help bring forward housing sites and will hopefully attract additional investment from developers who certainly need to be more confident that new places are supported by additional transport, schools and digital networks. There is a real push for more affordable homes and a real focus on London with £1.4bn allocated for affordable homes but an absolute lack of detail. This pledge could provide resources needed by housing associations to deliver a far greater number and a wider variety of homes. £3.15bn for London targeted to is promised to deliver 90,000 homes the clear message from the GLA is that there is certainly a new focus on low cost renting – The London Living Rent. The central government commitments could facilitate the GLA’s aspirations. Overall the response to the statement has been negative in the press and from a housing perspective we are probably all rather cynical.  Over the past few years there have been so many failed targets for delivering new homes and so many changes to funding promises – so let’s just be cautious and not to count our chickens before they have hatched! 

Nick Lloyd, National Head of Capital Markets for Lambert Smith Hampton

“Currently, stability and sustaining some GDP growth is more important than party politics and point scoring. From an employment perspective, it is disappointing but hardly surprising to see them go after some of the populist salary sacrifice benefits; from a property perspective, it is good to see the fiscal commitment to infrastructure as that will feed through to locational change and improvement and by association opportunities for investors.”

Jules Hind, Head of Leasing & Development for Farebrother

“Despite the anticipation of softening rents and general market uncertainty, the investment market seems to be defying gravity with overseas purchasers, in particular, still very active. The biggest challenge for the occupational market is the increasing supply of relatively poor quality, second hand tenant space; the sheer volume of square footage is likely to depress the general tone of office rents, across Central London, throughout 2017.”

Stuart Atkinson, Executive Director
for Doherty Baines

“Not much to cheer about for the commercial property market, unless you include Transfer Relief Caps on Business Rates, new funding for affordable housing or an improvement in infrastructure spending. The prospect of a reduction in SDLT never materialised and continues to impact on investment volumes. Speculation is probably correct that the level of stamp duty has now reached a point at which it starts to reduce the amount of revenue raised, as commercial property returns become less attractive, ultimately leading to a reduction in investment into the sector, or an increase in property traded through offshore SPV’s. Either way, the impact is far greater to the wider economy than the reduction in revenue suggests, as all businesses associated with the sector, from lawyers to building contractors, ultimately see a drop in their revenues.”

Steven Barker, the Chairman of Robinson Low Francis LLP

“All industry needs is certainty and sadly we have anything but that at the moment so the “wall” of money earmarked for property is playing a waiting game at present. As far as the Autumn statement goes, a reduction in SDLT would have given a good boost to business growth as it remains a huge barrier to growth and an insidious tax at best.

 The £2.3 billion into a new infrastructure fund is great news as is the £1.7 billion that should speed up house building on public land. Going forward though, we must stop using housing as a political football because it is unnecessary.

 As ever, the rhetoric is easy, the delivery is the key and the measure the Government will stand or fall by.”

James Evans, CEO of Douglas and Gordon

Like pretty much everyone else in the property industry, I spent Wednesday lunchtime watching Philip Hammond delivering his first Autumn Statement.

In an unexpected twist, he abolished the practice of giving Autumn Statements halfway through his speech. So how are we to judge this one-off collectors’ item, delivered at the end of an eventful year that will be remembered for its own set of seismic surprises.

Everyone can see that London and the South East has a chronic housing shortage, so it was really encouraging to hear Mr Hammond set out his aim to build 40,000 new homes and announce an additional £1.4bn to deliver them. The infrastructure investment of £23bn to deliver 100,000 new homes “in areas of high demand” was also good to hear.What we need to see – and quickly – is just how the government is going to deliver these new homes. It’s particularly important to consider planning laws, availability of land, infrastructure, and capacity in the labour force if the government is to achieve what it is setting out to do.The detail will be really interesting to see, but the ambition – and the significant investment – is great to see from the government.   

There was one area of the Autumn Statement that was noticeable by its absence – stamp duty land tax (SDLT). It was really disappointing Mr Hammond has not looked into cutting SDLT – I feel a real opportunity has been missed here. The 3% SDLT rate on additional homes is effectively a wealth tax that is putting off the people who would like to invest in one or two buy-to-let properties. Demand for rental properties in London is incredibly high, but the SDLT surcharge and cuts in tax relief undermines the confidence of would-be landlords. My fear with this is we will see unintended rises in rent, which really cannot be sustained. People who genuinely understand the London property market will be particularly disappointed at the lack of change to the highest SDLT band. The volume of properties in the top bracket is relatively very small, but the high rate of SDLT is stifling movement at the very top of the property food chain and that in turn is leading to stagnation in the rest of the market.We’re seeing demand significantly outstrip supply but it’s difficult to address this if the government doesn’t do anything to address bottlenecks in the market.

One part of the Statement that wasn’t a surprise (particularly as it was trailed heavily in the preceding days) was the changes to lettings fees. The industry has known for some time that this is a challenging area, but there will be a view that these fees will be passed indirectly to the tenants, through higher rents.

Only time will tell if this is the case. As soon as the industry has clarity on the detail of these changes, we can set a timetable in place.

Chris Wheatcroft, the Director of Kingham Ellis

Was this the Autumn Statement the property market was expecting?

“Prior to the Autumn statement, many well-known property commentators were suggesting that the chancellor should reduce the 3% stamp duty surcharge on second home transactions. Indeed many were confident that he might do this to boost the buy to let market. The fact he didn’t was perhaps an easier decision to make that it was to change the current threshold. Maybe the Treasury are making more from this that they had expected? The buy to let market has been hit with some hefty blows for investors, with the increase in stamp duty and also the cuts to mortgage relief. This has seen, and will continue to see a reduction in the smaller landlords buying investment properties to rent out. Is this a good thing? Does it mean first time buyers have more choice to get a foot on the ladder? However, with fewer than two-thirds of the UK population owning their own home and house prices still rising we will have to see – Maybe to help first time buyers, the seller/developer should pay the stamp duty – or part of?

£1.4 billion being set aside to provide affordable housing? This is all well and good saying this but just how will it work? I believe help needs to be given to smaller developers. If they are not penalised as much with added planning and development costs along with hefty CIL/S106 requirements then they can provide a more affordable product. If these financial requirements are relaxed and the savings are applied to the end product then this will create some affordability.

The proposed investment and spending on infrastructure is a good thing, the worry is the lack of detail surrounding this and also where and when this is proposed to be delivered.”

So was this a step in the right direction for the UK property market? I guess only time will tell….

Michael Paul, Managing Director of Strangford Management

“It is great news for home developers with an injection of £2.3bn to support 100,000 new homes. However, we do expect to see a slight increase in overall service charge spending with the Insurance Premium Tax increasing to 12% from next June, seeing it rise by 7% overall in the last 6-7 years. It’s also positive news for on-site staff too with the planned increase in income tax from next April.”

Russell Quirk, Founder & CEO of eMoov

“This year’s Autumn Statement, the last by all accounts, was heralded in the wake of its leaks as a housing giveaway. And we did see announcements of £3.7bn in apparently new money allocated to dealing with the shortage of new build residential property stock. £1.4bn to create 40,000 affordable homes and £2.3bn to create infrastructure to accommodate a further 100,000 homes.  

That was the good news together with talk of forthcoming big investment in Venture Capital via the British Business Bank (£400m) and an injection of monies into an Industrial Policy Fund to promote innovation and technical development. Hopefully, some of those monies are destined for the Prop Tech sector. But as ever, the Devil is in the detail and of which we have seen none.

The cynical amongst us will wonder therefore, if wheeling out such aspirations to tackle our housing crisis amounts in the end to just more rhetoric. You know, politicians saying things that they don’t honour, broken promises and all that – which we all seem to be getting more and more accepting of, frankly.

Building the additional 100,000 homes that we need will take more than mere Despatch Box derived headlines. We need action over and above words and to hold Chancellors, Prime Ministers and Housing Ministers to account when successive individuals in those roles spout ‘intentions’ but that rarely actually come true. In other words, we’ve heard it all before.

The solution? 

The govt needs to man up over the Green Belt and redesignate the crap bits and build on them. It also needs to force Govt departments and local councils to identify and develop its own land of which there are thousands of acres sitting there laid to waste currently. Oh, the irony of that. And it needs to create its own development arm to build the stuff that we can’t seem to get the big building firms to build, content instead to drip feed their landbank rather too slowly.

Oh, before I forget. The chancellor abolished upfront lettings fees. A stupid, knee-jerk piece of tokenism that the Treasury did not even bother to consult upon before making the announcement. Simply, the cost will be passed on to the tenant through hiked rents. Obviously.

All in all, this Autumn Statement was less give away and more take away.”