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Federation of Master Builders
Christmas might still be over a week away but the property world is feeling a little bit like it received some presents early in this year's Autumn Statement. And like with all good gifts, some reflection is due after the initial excitement to truly comprehend their significance and how they can be used in the future.But what were the Christmas crackers included in George Osborne's statement and are they as good as they initially seem?Capital Gains TaxThe chancellor's move to impose Capital Gains Tax on the sale of residential properties owned by non-UK residents has been welcomed by some, specifically in London where foreign investors are at their highest number. The government hopes the move will help to make homes more affordable for UK buyers and reign in price inflation in the capital, which could threaten a bubble.However, not everyone is convinced that this is the right move by Mr Osborne. Robert Bartlett, chief executive officer of Chesterton Humberts, said: "Sadly, this is probably the wrong way to tackle the problem. The levy could have a significant psychological effect on overseas buyers (who may start to worry that they are being unfairly targeted) but is still unlikely to drastically reduce demand. However, if they are repeatedly targeted, our concern is that they may be driven away from the UK in the foreseeable future.""Yet again the government have managed to throw a potential hand grenade into the arena without having thought through any detail and thus their ability to assess the blast area. Uncertainty is the biggest destroyer of markets," he added.Stephanie McMahon, head of research at Strutt & Parker, agrees with Mr Bartlett, claiming return on investment after April 2015 will be lowered by almost one third, potentially causing investors to look elsewhere.Increase housing supplyThe government has pledged to "take further action to increase housing supply" by funding infrastructure to unlock large housing sites and ensure there is money available for new affordable homes. This will be done by increasing the local authority Housing Revenue Account borrowing limits, which will be allocated on a competitive basis, and from the sale of vacant high-value social housing."The GBP 1 billion, six-year programme to fund infrastructure to unlock new large housing sites is a definite step in the right direction, especially in locations most suited to meet buyer demand," Mr Bartlett said. However, he claims there should be "greater assistance from the government for developers who are experiencing difficulties in progressing development sites with consent".Addressing supply issues is a central issue for the government, as demand continues to outstrip existing housing stock. Not only does this mean there aren't enough homes for Britons, but it drives up prices and puts the UK at risk of a bubble. However, Ms McMahon warns that the devil will be in the detail when it comes to unlocking investment and people will be waiting for more detailed plans from the government.Mortgage support schemesAffordability and access to lending have been two central issues since the government came to power - luckily the Autumn Statement didn't disappoint. Mr Osborne pledged to continue his support of the mortgage market and lenders Virgin and Aldemore have also got on board.With parts of Funding for Lending coming to an end, ensuring there is still stimulus available will be important to allow the market to maintain its momentum. However, this has to be balanced against the threat of a boom and bust mentality.A great gift or sack of coal?The Autumn Statement certainly contained some pleasing announcements for the property industry and gives investors the confidence they need going into the new year. However, there are those that believe Mr Osborne could have gone further.Brian Berry, chief executive of the Federation of Master Builders, said: "The Chancellor has missed an opportunity to reduce VAT on housing renovation and repair. This would deliver an instant economic fillip to millions of households that are struggling with the ever-increasing cost of living and give Britain's builders the boost they need to capitalise on the recovery."
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