A positive budget for rural property - creating certainty and not tinkering

There were some important announcements but what was really positive was the simple approach of not tinkering. The Chancellor created certainty that individuals and businesses need in the current economic climate. The proposal to create a simpler tax  system, by combining income tax and national insurance, is possibly the most significant move proposed by the Government.

The key announcements affecting property and rural areas are:

1. A new £250m plan to help 10,000 first-time house buyers called FirstBuy

Direct, which will kickstart the residential property market.

We welcome any move to stimulate the housing market which has seen the number of first time buyers halve since 2004/5 (347,000 in 2010 - a record low – compared with more than 700,000 people in 2004). This is a welcome move and should encourage movement further up the housing chain; however, it is unfortunate that it only applies to new houses and so will not be as effective as if it applied to all houses bought by first-time buyers.

There is also a proposal to ensure that owners of high value property “pay their fair share”. We will keep this under review but do not support changes that could create new blockages in the housing market.

A significant missed opportunity was to reduce the rate of VAT for repair and maintenance work on people’s homes. This would stimulate the construction industry and encourage people to invest in energy efficient home improvements. It should be an element of the Green Deal being introduced next year.

2. Business rate relief for small businesses extended by one year to October

2012.

This is a positive step as it will help support small businesses, in urban as well as rural areas. We would also like empty property rate relief to be reinstated as it is a block on enterprise. We know that new business premises are not being developed due to owners’ fears of having to pay rates on empty property.

3. Continued reform of the planning system.

Again, this is welcome as the current system is unnecessarily slow, expensive and restrictive so we welcome the new presumption in favour of sustainable development. We support any move in the planning system to encourage growth and development but wait to see how any changes which make it more difficult for communities and councils to oppose developers' applications will operate.

The proposals for a trial of an auction system for planning permissions is radical and, if it supports economic growth and housing building, we would support it.

4. Introduction of a carbon price.

This is a radical announcement and reinforces the Government’s ambition to be the greenest in UK history; however, the price must be set at a level that drives green innovation and the starting rate does appear too low. We welcome any announcement that gives greater certainty to green investment, including the tripling of the Government finance for the Green

Investment Bank. Delaying the Bank’s right to borrow money to 2015 is negative and will be criticised by the renewables industry, which will have wanted greater potential for expansion.

5. Reduction in inheritance tax rate from 40% to 36% when 10% of an estate is given to charity. This, combined with the announcements on extending and simplifying gift aid, should encourage big society and more support for the charitable sector.

6. Review of Tax Reliefs:

The Office of Tax Simplification has published its final review and has recommended a complete review of the whole inheritance tax scheme, which will be a long term project. Before this happens, it does not appear that there will be significant changes to agricultural property relief or business property relief, which is good news for the farmland market as it removes concerns that there would be a dramatic announcement which would reduce land values.