What can property investors expect from Chancellor George Osborne’s third and final budget speech of the year?
Autumn Statement 2015 and Spending Review
Wednesday 25th November, 12.30pm
For the final time this year, UK Chancellor George Osborne is preparing to reveal his latest wave of economic changes to the nation.
The annual Autumn Statement is this year also coinciding with the first Spending Review since 2013, in which the government will outline its spending plans for the next five years.
For property investors, budget changes so far in 2015 have been met with a mixture of positivity and concern. July’s Budget for example, the first since the majority Conservative victory in the General Election, saw the reduction in the buy-to-let mortgage tax relief to just the base rate, impacting those investors who cannot rely on high yields to generate profits. However, a further £30 million worth of investment for Manchester under Northern Powerhouse plans was welcomed by those investors with real estate in the north-west city.
So what can property investors expect from the 2015 Autumn Statement?
MORE NORTHERN POWERHOUSE INVESTMENT
Select Property Director Giles Beswick said that the Chancellor continued to remain confident and adamant when he announced his latest proposals for the Northern Powerhouse in July’s Budget. And Mr Osborne is expected to unveiling his latest plans for his economic brainchild.
It’s likely that we will see more devolved powers announced for ‘new’ Northern Powerhouse cities. So far both Manchester, the unofficial heart of the plans, and Liverpool have been granted the power to elect their own mayors, as well to have greater control over their public services and local transport. Now similar measures could be implemented in other major northern cities such as Sheffield and Leeds.
The Northern Powerhouse aims to address the economic imbalance between London and the north of England, with numerous multi-million and multi-billion investment deals having already been agreed and announced.
For real estate investors, the prospect of acquiring assets at the start of an inevitable growth curve such sustained investment is likely to trigger has prompted many to focus their strategies on key Northern Powerhouse cities. In Manchester, for example, an estimated 10,000 new private rented sector units are due to be constructed in the city over the next few years, driven primarily by investment from institutions such as pensions funds and private businesses.
MEASURES TO CONVERT EMPTY PRISONS INTO NEW HOMES
In a move that underlines the UK’s housing shortage in the face of huge demand and the urgent need for investment, Mr Osborne is expected to announce plans to extend a housing initiative that will allow antiquated, empty prisons to be converted into new homes.
As part of the Spending Review, the Chancellor will confirm proposals for nine new prisons in Britain. But it’s the prospect of seeing some of the UK’s oldest prisons being transformed into residential units that has caught the eye of many analysts. Mr Osborne, speaking at an event at Imperial College London earlier this month, commented that many prisons are unsuitable “relics from Victorian times that stand on prime real estate”.
Capital growth in the UK is expected to reach 10% by the end of the year, as values continue to soar with the demand for property being met with record low levels of supply. Unlocking unused sites like these can present strong investment opportunities as Britain looks to provide the homes it needs.
FURTHER INHERITANCE TAX BREAKS
It was one of the key announcements in July’s Budget, and the Chancellor could be set to outline further Inheritance Tax breaks on Wednesday.
In the summer the Inheritance Tax threshold was raised to £500,000 for individuals and £1 million for married couples, thanks to the introduction of a ‘family home allowance’. Crucially for investors, bringing in Inheritance Tax Credits, whereby those couples considering downsizing can now do so without missing out on the £1 million threshold, also raised the possibility of larger properties traditionally occupied by older couples coming back onto the market.
Whether real estate will feature in any new Inheritance Tax changes remains to be seen, but it’s important not to rule anything out if previous Budgets are anything to go by.
We will be live-blogging the 2015 Autumn Statement. Follow the Chancellor’s speech from 11.30am on Wednesday 25th November here at SelectProperty.com.