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New planning guidance for central London published by the Mayor
Protecting London's vibrant commercial heartland and ensuring it can remain a key driver of the UK economy for decades to come is the focus of major new planning guidance published by the Mayor of London, Boris Johnson MP today. The Mayor of London has published major new planning guidance aimed at protecting the city’s vibrant commercial heart which is a key driver of the UK economy. The Central Activities Zone, running from Kensington Gardens and Paddington in the west, to Aldgate in the east, and from Kings Cross and Euston in the north to Elephant and Castle and the Battersea Power Station in the south, is regarded as the economic and administrative epicentre of London. The area, which is approximately 13 square miles in size, employs more than 1.7 million people and boasts outstanding heritage, shopping and culture and attracts millions of visitors every year. It generates almost 10% of the UK's economic output and is also home to more than 230,000 people. However, in recent years, some valuable office space in the area has been lost to new housing in a move that if continued could threaten the capital's economic pre-eminence. But the Mayor believes that the demand to create new homes in London does not need to be at the expense of the business, culture and other key functions of the zone. ‘The heart of the capital is the foundation of London's reputation as best city in the world in which to do business. While we continue to do all we can to increase housing supply city-wide, it is also vital that we protect our office space so central London continues to be a key generator of economic prosperity for the entire country,’ said Mayor Boris Johnson. Highlights of the new Central Activities Zone Supplementary Planning Guidance, which is aimed at planners, developers and local authorities include working to address the recent tension in central London between residential and office space. The Government recently announced that from May 2019 it will allow office space in central London to be converted into homes without developers applying for change of use planning permission. This will replace an exemption that the Mayor negotiated in 2014 that has protected London's core office space. The Mayor is working closely with London's local authorities to bring forward special planning regulations known as Article 4 directions so that they can continue determining planning applications for the change of use. This will ensure that London's commercial heartlands will be protected from planning changes. For the first time ever, detailed guidance states that new residential development is not appropriate in the commercial core of the City of London and northern Isle of Dogs. The guidance also includes more stringent criteria to guide applications across all of central London which would lead to the loss of offices. It pinpoints geographical parts of central London where commercial use should be given priority over new residential developments. This includes substantial areas such… Continue reading
New stamp duty rates for commercial property in the UK announced
Investors in larger commercial property in the UK see a rise in stamp duty rates but buyers of smaller properties will benefit from a reduction in the tax payable. The way stamp duty on freehold commercial property and leasehold premium transactions is calculated has changed. The rates used to apply to the whole transaction value but from today (17 March) new tax rates and bands come into force. The new rates and tax bands are 0% for the portion of the transaction value up to £150,000, 2% between £150,001 and £250,000, and 5% above £250,000. It means that buyers of commercial property worth up to £1.05 million will pay less in stamp duty. Stamp duty rates for leasehold rent transactions will also change, with a new 2% stamp duty rate on leases with a net present value over £5 million. Opinion over the effect of the change is divided. According to the British Property Federation (BPF) it is not all good news. ‘Commercial property investment can often act as the catalyst for regional growth and as the economy has recovered investment has been spreading out from London to the UK’s regions, but will now undoubtedly slow,’ said Melanie Leech, BPF chief executive. ‘The real set back is that development in places like the Northern Powerhouse and Midlands’ Engine will now be held back as a result of this out of the blue raid on commercial property transactions,’ she explained. ‘Over a decade ago, the Government of that time decided to decouple the commercial and residential rates of SDLT recognising that the sectors were driven by very different factors and there was no logic in charging the same rates of SDLT on commercial and residential property. We can only hope that today’s announcement isn’t any unravelling of that logic,’ she added. However, Mark Tighe, managing director of capital allowances tax specialists Catax Solutions, believes that the reduced stamp duty payable will drive demand in this key asset class in the months and years ahead. But he warned that the resultant increase in transactions, among both businesses and private individuals buying commercial property, will potentially cost billions as a largely unused tax relief is lost forever. ‘Capital allowances are a highly valuable tax relief available to owners of commercial property but under current legislation they are irrecoverable if they are not identified and realised at the point of sale,’ he explained. ‘Currently, very few commercial property owners, along with their accountants and lawyers, are aware of unused capital allowances tax reliefs. Therefore as transaction levels increase in volume and momentum, commercial property owners are set to lose significant tax rebates to the tune of thousands, tens of thousands or even hundreds of thousands of pounds,’ he added. Continue reading
No good news for buy to let landlords in UK Budget
There was little good news for residential landlords in the UK’s Budget announcement with the Chancellor of the Exchequer adding to their woes by excluding them from a tax giveaway. Just weeks before landlords in the growing buy to let sector face an extra 3% stamp duty charge under a change to tax on additional homes, George Osborne announced they will be excluded from Capital Gains Tax change. ‘Buy to let investors could be forgiven for being completely paranoid. On this evidence, the Chancellor really has got it in for them and has excluded buy to letters from a huge CGT giveaway,’ said Jamie Morrison, private clients partner at the chartered accountants HW Fisher & Company. ‘With more incentives to help savers and first time buyers get on the property ladder, buy to let owners have once again been cast in the role of fall guy,’ he added. David Cox, managing director of the Association of Residential Letting Agents (ARLA), pointed out that this is now the third Budget which directly attacks landlords. ‘The sector has been punitively taxed, with stamp duty on buy to let properties, mortgage interest relief and now capital gains tax changes. It’s an outright assault on the sector,’ he said. ‘Every other sector has been offered a tax break yet there is nothing here to help the private rented sector, including landlords and most importantly tenants, who will see rent costs rise to subsidise the taxes that landlords pay on property. The government talks about wanting to help the younger generation get onto the property ladder, but with the changes announced today the supply of available property is bound to decrease, and as a result rents will rise,’ he explained. ‘In November, when Osborne announced an increase in stamp duty tax on buy to let properties, we described this as a catastrophic move. The news that larger investors will also have to pay the tax is even worse. Professional landlords, those who typically own more than 15 properties, play a vital role in providing rental stock to the market, and providing the army of renters we have in this country with housing,’ Cox added. ‘Our members forecast that the supply of buy to let properties will dwindle when the new tax comes in to effect, and this news means that supply will fall even faster and harder. We’re already in a position where demand out-strips supply and as supply falls, rent costs rise, meaning the goal of home ownership falls even further out of reach for most of the country’s renters,’ he concluded. Richard Lambert, chief executive officer of the National landlords Association (NLA), said it is clear that the Chancellor does not regard ordinary people putting their own money into providing homes as worthwhile. ‘The steady upward ratchet of taxation on landlords over the past year shows that George Osborne is determined to bear down on the private rented sector, but he still depends on… Continue reading
