24 November 2016

In a low key Autumn Statement here are the main points of interest from a real estate perspective:


We still await the promised Housing White paper for more details on how the Government proposes to increase housing supply and halt the decline in housing affordability. This is due to be published "shortly" but in anticipation the Autumn Statement contained several helpful new funding initiatives to boost housing supply alongside other changes:

  • £1.4 billion funding via the NPIF for an additional 40,000 housing starts by 2020-21.
  • A large-scale pilot under which over 3,000 housing association tenants will be able to buy their own home with Right to Buy discounts.
  • Relaxed restrictions on government grant funding to allow providers to deliver a mix of homes for affordable rent and low cost ownership.
  • New £2.3 billion (by 2020-21) Housing Infrastructure Fund to provide the infrastructure required to permit private house building in high demand areas aiming to deliver up to 100,000 new homes.
  • Continued support for homeownership through the Help to Buy: Equity Loan scheme and the Help to Buy ISA.
  • London will get £3.15 billion for 90,000 affordable homes.
  • Ban on upfront fees charged by letting agents in England, for example when tenants sign a new tenancy agreement. The government will consult on this in due course.
  • In early October, the government announced that it would pilot accelerated construction on public sector land, backed by up to £2 billion of funding. To do so, the government will invest £1.7 billion by 2020-21 through the new National Productivity Investment Fund (NPIF) to speed up house building on public sector land in England through partnerships with private sector developers.

Business rates

To remove the inconsistency between rural rate relief and small business rate relief the government will double rural rate relief to 100% from 1 April 2017. The Communities Secretary will lower the transitional relief cap from 45% next year to 43% and from 50% to 32% the year after. This very modest change disappointed businesses hoping for more far-reaching reforms of the business rates system.

Land Registry

Will not now be privatised, the government having considered the disquiet about this proposal evidenced in responses to its consultation. Hopefully staff at the Registry can work on clearing the backlog of applications undistracted by fears of large scale re-organisation.

Missing: exemptions for institutional buy to rent from 3% SDLT levy, no delay to implementation of interest deductibility rules following BEPS

Commentators had hoped that there would be a move to exempt institutional investors in buy to rent property from the 3% SDLT surcharge, to remove this barrier to large scale investment in the private rented sector but this did not materialise.

Similarly representations had been made that the real estate sector may be disproportionately impacted by the implementation on 1 April 2017 of the OECD recommendations on BEPS that countries should restrict the tax deductibility of corporate interest expense. From 1 April there will be a Fixed Ratio Rule limiting corporation tax deductions for net interest expense to 30% of a group’s UK earnings before interest, tax, depreciation and amortisation, subject to a de minimis group threshold of £2 million net of UK interest expense. The intention is to deal with multinational enterprises exploiting gaps and mismatches between different countries’ tax systems but as the real estate sector is so capital intensive, there is real concern that restricting the tax deductibility of debt will increase its overall cost to companies in the sector. This is likely to reduce the amount of debt capital that the sector can deploy and may make it more expensive for real estate companies to fund themselves through borrowing.

Key contact

Ross Polkinghorne

Ross Polkinghorne Partner

  • Built Environment
  • Development and Regeneration
  • Infrastructure

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