TSI
New planning reforms in UK welcomed, but lack of resources not addressed
The British Property Federation has welcomed the majority of the changes announced in the autumn financial statement by the UK Chancellor but expressed disappointment that there was no mention of a review of planning fees. ‘While there are some really sensible suggestions in today’s announcement, the planning system still has one big problem, the lack of resources in local authority planning departments,’ said Melanie Leech, chief executive of the BPF. ‘Both the private and public sector have identified this as one of the biggest obstacles for development, and with the private sector willing to discuss how it might be able to plug the funding gap, it is frustrating that Government has not engaged on this matter,’ she added. Included in the statement was amendments to planning policy to ensure the release of unused and previously undeveloped commercial, retail and industrial land for Starter Homes, and support for the regeneration of previously developed, brownfield sites in the greenbelt, by allowing them to be developed in the same way as brownfield sites elsewhere, providing it delivers Starter Homes. It will be subject to local consultation, such as through neighbourhood plans and Leech described it as a ‘very sensible step’ and one that will put a stop to endless battles in the planning regime as well as bringing forward the Government’s intended 200,000 Starter Homes. ‘The sites that will be eligible for this will not be lush green fields, but rather disused scrap yards and car parks which happen to sit within the Green Belt, and which are calling out to be more productively used,’ she pointed out. There will also be the establishment of a new delivery test on local authorities, to ensure delivery against the number of homes set out in Local Plans. The BPF believes that Local Plans are the key to sustainable development. Leech said it will ensure that local authorities really do concentrate on growth for their area and that their local plans are focused on delivery and the practicalities of housing the population. ‘The lack of resources afflicting local authority planning departments is an issue, and if authorities can keep their local plans kept short and sharp, they will help themselves,’ she added. The changes will also see the release of public sector land with capacity for 160,000 homes representing a more than 50% increase on the government’s record in the last parliament ‘The homes that are brought forward on these sites must be serviced with sufficient infrastructure and will ideally have homes for sale and for rent, to ensure that they contribute to mixed, vibrant communities,’ said Leech. The government will bring forward proposals for a more standardised approach to viability assessments, and extend the ability to appeal against unviable section 106 agreements to 2018. It is well known that a lot of disagreement between local authorities and developers arise due to viability assessments so the move towards a standardised viability model should go a long way to… Continue reading
New generation of skilled builders needed to fulfil UK’s new housing plans
A new generation of skilled builders will be needed to fulfil the UK government’s latest pledge to build hundreds of thousands of new homes, according to industry experts. The house building industry has welcomed the announcement of a £7 billion fund to prioritise home building with 200,000 starter home with 20% discount for those aged under 40, 135,000 shared ownership home, 10,000 rent to buy homes and 8,000 specialist properties for the elderly and disabled. But the Federation of Master Builders (FMB) pointed out that already developments are being stalled or held up due to the cost of hiring skilled tradesmen and with a shortage of apprenticeships the skills problem is not about to go away. ‘Unless we see a massive uplift in apprenticeship training in our industry, there won’t be enough pairs of hands to deliver more housing on this scale. The Chancellor clearly recognises that the crisis of home ownership is inextricably linked to a crisis in house building. We therefore hope that in order to address both, the Government will do everything it can to increase house building capacity,’ said Brian Berry chief executive of the FMB. ‘SME developers will have an important role to play in delivering the smaller scale sites across the country. The last time we built in excess of 200,000 homes in one year was in the late 1980s when two thirds of all homes were built by small developers,’ he pointed out. ‘SME house builders now only build little over one quarter of all new homes which points to another serious capacity issue as we need more small house builders to enter the market and also for SME house builders to crank up their delivery of new homes in order to build the Chancellors 400,000 new affordable homes,’ he added. There was much in the Autumn Statement for the construction industry to be excited about but some of the fundamental barriers to house building and, in fact, construction of any kind, remain in place, according to Simon Craven, director at Tower8. ‘If we are to see spades in the ground, then we need to see more of skilled workers to deliver these grand schemes. Further funding for a skilled workforce is required if the construction industry is to match the potential projects that the Chancellor is so keen to encourage,’ he explained. ‘Pressure on the construction industry comes from project costs such as staffing, materials inflation and other key factors that affect delivery. The Chancellor has left many of the problems of supply side and skills to the private sector to resolve which is a potentially exciting move. But the grey area occurs where the private sector works with local authorities, planners, education and divergent goals between these parties mean that the progress required is simply not made,’ he added. 'Furthermore, we have been interested to speak with many of the firms that are looking to deliver PRS schemes in the… Continue reading
Sau Paulo has the highest property taxes for real estate investors
As the rate of price growth slows in many global city markets, transaction costs and taxation are becoming increasingly important considerations for investors, a new analysis suggests. With slower price growth forecast in a number of prime city markets, investors are looking more closely at the cost side of the investment equation, according to the report from international real estate firm Knight Frank. While there may be a number of factors behind the choice of location, the research shows that the tax burden across the cities in this report varies considerably both in amount and extent. The tax costs range from as low as 3.5% or 3.6% of the property price in year five in Monaco and Dubai respectively, to over 30% in Sao Paulo. Despite encompassing a wide variety of cities and policies, a number of common themes and trends have arisen throughout the research. For example, in some cities, most notably in Geneva and in Mumbai, there are significant legal restrictions for non-residents who wish to purchase property so it is important to consider these before an investment decision is made. In some jurisdictions, the tax costs are represented primarily by acquisition taxes, notably in Monaco and Dubai, while in most other jurisdictions, tax costs usually comprise acquisition duties payable when purchasing the property; wealth or yearly taxes when holding the property; taxes on rental income, and taxes on disposal of the property, including tax on gains and/or duties at the point of the sale of the property. While in some countries the relative/percentage tax costs are almost equal for both US$1 million and US$10 million properties, in others the tax costs of holding the US$10 million property are almost double those for US$1 million property, the report points out. ‘Finally, it is important to note that some taxes, such as inheritance/gift taxes have not been taken into account in this analysis. Nor were home country taxes. Moreover, we have assumed that investors purchase in their personal name but that might not necessarily be the most efficient from a host or investment country’s tax perspective,’ the report says. However, overall property costs remain largely the same for both a $1 million and $10 million property in many cities such as Sao Paulo, Mumbai and Geneva whilst others see a significant reduction in percentage terms at the $10 million level such as New York and Paris. Reviewing the tax costs across the 15 main cities shows that taxation is highest in Sao Paulo, at both the US$1 million and US$10 million levels, where investors are taxed at 31.5% of the sale value at year five. Hong Kong and Sydney also rank highly. An investor purchasing a US$1 million property in Hong Kong is taxed 22.4%, whilst at the US$10 million level investors in Sydney are taxed 26.0%, in both cases as a percentage of year five price. Monaco offers non-resident investors the lowest rate of tax at 3.5% as a percentage of… Continue reading
