2011 Autumn Statement: property implications
On 29 November 2011, the Chancellor of the Exchequer, George Osborne, delivered the autumn forecast statement.
On 29 November 2011, the Chancellor of the Exchequer, George Osborne, delivered the Autumn Statement 2011.
The Autumn Statement contains announcements on the following areas that are of interest to the property industry:
An extension of the current small business rate relief holiday and a scheme to allow businesses to defer 60% of the increase in their 2012-13 business rate bills.
Additional enterprise zones, expansion of the existing enterprise zone in the North East and details of enhanced capital allowances that will be available in some enterprise zones.
A series of reforms to the planning, and related development consents, regimes to reduce the costs and time involved in developing infrastructure.
Details of infrastructure projects designed to improve the UK's transport and broadband networks.
Measures to cut the burden of health and safety regulation and the regulatory burdens on farmers and food processors.
The Autumn Statement also confirms the government's support for the housing market, which was announced in Laying the Foundations: A Housing Strategy.Close speedread
Kick-starting the economy
The last few months have presented Europe with some hair-raising moments and the consideration of the previously unthinkable with the occurrence of the Eurozone crisis. The government needs to do something to kick-start a flattening economy. Although work has already started on the government's proposals to grow the economy, as evidenced in the accompanying Plan for Growth, the Autumn Statement 2011 reveals, to a certain extent, more of same with the continuation of the inevitable austerity measures. It remains to be seen whether the government's plans to stimulate the housing market and its programmes for investment in infrastructure will work. However, its plans to invest in new roads, rail, high speed broadband, and its support of enterprise will be welcomed by businesses.
This update covers the main proposals in the Autumn Statement 2011 affecting the property industry. For information on other aspects of the Autumn Statement, see:
The following defined terms are used in this update:
Small business rate relief
The government has announced that it will extend the current small business rate relief holiday for a further six months from 1 October 2012. This gives full relief for eligible small businesses occupying property in England with a rateable value of up to £6,000, and tapering relief for businesses with a higher rateable value up to £12,000.
The temporary measure was initially introduced in the June 2010 Budget for one year from 1 October 2010. The relief was extended until 30 September 2012 in the March 2011 Budget. For more information, see Legal update, Temporary increase in small business rate relief for England extended to 30 September 2012 ( www.practicallaw.com/8-506-8590) .
(Autumn Statement, paragraph 1.120.)
Business rate deferral scheme 2012-13
All businesses in England will be given the ability to defer 60% of the Retail Prices Index based increase in their 2012-13 business rate bills. The deferred amount is to be repaid equally over the following two years.
(Autumn Statement, paragraph 1.120.)
The government set out its initiatives to reinvigorate the housing market in Laying the Foundations: A Housing Strategy for England, published on 21 November 2011. See Legal Update, New housing strategy launched ( www.practicallaw.com/8-513-5368) .
The Autumn Statement reiterates the government's commitment to the strategy. Cornerstones of the strategy are:
The introduction of a new build indemnity scheme aimed at increasing the supply of affordable mortgage finance for new build homes. Home buyers will be able to buy with a 5% deposit. Housebuilders and the government will contribute to an indemnity fund, which will be used to pay out to a lender where a buyer defaults and there is a shortfall if the property is repossessed.
Reinvigorating the Right to Buy scheme by raising the discount that makes it attractive to tenants to buy their own homes.
The launch of a new £400 million investment fund called Get Britain Building. The fund will support firms that need development finance, especially to start work on stalled sites that have planning permission.
The encouragement of new development that enjoys local support.
The government has also confirmed that stamp duty land tax relief for first time buyers will end on 24 March 2012, as planned (see Legal update, June 2010 Budget: property implications: First-time buyer "relief" ( www.practicallaw.com/4-502-5404) ). The relief has proved ineffective at increasing the number of first time buyers entering the housing market.
(Autumn Statement, paragraphs 1.101 to 1.103 and Annex A, paragraphs A.59 to A.64.)
On 31 October 2011, the Department for Communities and Local Government (DCLG) published a consultation on technical reforms of council tax. For more information, see Legal update, Consultation on technical reforms of council tax published ( www.practicallaw.com/8-510-3428) .
The government has set aside an extra £675 million for local authorities in England who freeze or reduce their council tax in 2012-13. The devolved administrations will receive additional funding.
(Autumn Statement, paragraph 1.131.)
Reduction in water bills in the South West of England
Households in the South West face the highest water bills in the country. The government has decided to fund South West Water to enable it to cut bills by £50 per year for all household customers.
(Autumn Statement, paragraph 1.134.)
Enterprise zones: expansion of areas and benefits
Additional enterprise zones approved
Enterprise zones ( www.practicallaw.com/1-386-4462) (proposed by the relevant Local enterprise partnership (LEP) ( www.practicallaw.com/9-502-7373) ) will be approved for:
Two new areas centred on BAE sites affected by significant redundancies announced in September 2011:
Warton in Lancashire; and
Brough in Humberside.
An extension of the existing enterprise zone in the North East LEP area, to include the Port of Blyth (assuming satisfactory results to the due diligence into its eligibility).
These will be added to the existing list of 22 enterprise zones. For more details, see:
Consideration of new enterprise zone in London
The government will also consider approving a new enterprise zone at Battersea, linked to the redevelopment of the old power station. Potential for such redevelopment is enhanced by the government's indication, in the Autumn Statement, of support for the extension of the Northern Line to Battersea.
Enhanced capital allowances in some enterprise zones
100% first year capital allowances ( www.practicallaw.com/4-107-5846) will apply to expenditure on plant and machinery (between April 2012 and March 2017) by businesses located in the enterprise zones in each of the following LEP areas:
- Black Country.
- North Eastern.
- Tees Valley.
There will be a cap of €125 million per project.
Although this potential benefit was heralded in August 2011, this is the first time that details have been given. Businesses claiming the 100% capital allowances gain a cash flow advantage because the cost of the plant and machinery can be offset against tax in the first year, rather than in instalments over that year and subsequent years.
(Autumn Statement, paragraphs 1.88, 1.121 and 2.25 and Annex A, paragraphs A17, A109 and A110.)
The UK's planning and consent regime has been identified as a major reason for UK infrastructure being more expensive to build compared with other European countries. The regimes are also blamed for causing significant delays. To address these problems, the government is proposing the following reforms to the planning system.
Implementing the Penfold review
In July 2010, Adrian Penfold (the head of planning and environment at British Land) published a report reviewing the regimes for obtaining non-planning consents for property development projects (the Penfold Review). His recommendations aimed to create greater certainty, achieve speedier decisions and reduce duplication and bureaucracy in determining non-planning consents. For more information on the Penfold Review, see Legal update, Penfold Review: final report published ( www.practicallaw.com/7-502-7425) .
Following the Penfold Review, the government announced the following:
Once the National Planning Policy Framework (NPPF) is finalised (expected to be by April 2012), key consent and advisory agencies (Environment Agency, Natural England, English Heritage, Highways Agency and the Health and Safety Executive) will have a remit to promote sustainable development. This will ensure that these bodies consider the impact of their decisions on sustainable economic growth, as well as the environmental and social aspects of sustainability. This should also ensure that they approve consents swiftly (where appropriate).
For further information on the NPPF, see Legal update, Consultation on Draft National Planning Policy Framework ( www.practicallaw.com/7-507-0310) .
The government will introduce a 13-week maximum timescale for the majority of non-planning consents, to speed up the consent process and give certainty to developers. Non-planning consents include environmental permits, hazardous substance consents, compulsory purchase orders, listed building and conservation area consents, highways consents and building regulation consents. This will come into immediate effect for government agencies.
The government will simplify a number of non-planning consents from early 2012. Some consents will no longer be needed.
The government will make it easier to apply for non-planning consents. This will include providing information and links on the Planning Portal ( www.practicallaw.com/6-106-7317) regarding key non-planning development consents closely associated with planning permission.
(Autumn Statement, paragraph 1.98 and NIP 2011, paragraph 6.12.)
The government has also published a statement of its progress on implementing the Penfold Review recommendations, see BIS: Implementation of the Penfold Review (November 2011) ( www.practicallaw.com/1-514-2188) .
The government announced that it will:
Ensure that there is a more effective mechanism for applicants to obtain a costs award following an appeal against a refusal of planning permission where a statutory consultee has acted unreasonably. This measure will be implemented in summer 2012. In the longer term, the government wants to extend this approach to the pre-application phase of the major infrastructure planning process.
For background information on costs awards, see Practice note, Costs awards in planning appeals ( www.practicallaw.com/0-384-7227) .
Improve the performance of the key statutory consultees in responding to planning applications. This will include the key statutory bodies bringing forward an improvement plan by spring 2012.
Require statutory consultees to demonstrate the role they are playing in supporting sustainable development.
Strengthen relationship management between the statutory consultees and major developers. The government will consider proposals to provide a named relationship manager at board level for the largest 25 developers with whom statutory consultees interact.
Increase the transparency of the key statutory consultee bodies.
(Autumn Statement, paragraph 1.99 and NIP 2011, paragraphs 6.14 to 6.17.)
Major infrastructure planning regime
The Planning Act 2008 introduced a new regime of unified development consent for nationally significant infrastructure projects (see Practice note, Planning Act 2008: examination procedures for nationally significant infrastructure projects ( www.practicallaw.com/1-422-4500) ).
The government announced that it intends to build further flexibility into the major infrastructure planning regime, particularly in working with developers in the pre-application phase. These improvements will be implemented by summer 2012.
A formal review of the regime for major infrastructure projects will be conducted from April 2014.
(Autumn Statement, paragraph 1.99 and NIP 2011, paragraph 6.21.)
Compliance with Habitats and Birds directives
The Habitats directive and the Birds directive provide for habitats and wildlife protection regimes, including designations of protected sites and species. Existing or proposed designations can impact on development proposals. The full names of these directives are:
Directive 92/43/EEC on the conservation of natural habitats and of wild fauna and flora.
Directive 2009/147/EC on the conservation of wild birds.
For background information on the directives, see Practice note, Habitats and wildlife: overview ( www.practicallaw.com/2-504-4875) .
The government announced that:
It will ensure that compliance with the Habitats and Birds directives does not lead to unnecessary costs and delays to development.
It intends, by the 2012 Budget, to review the directives as implemented in England.
It is committed to tackling impediments to development where compliance is particularly complex or has a significant impact.
There has been progress on specific projects where compliance has already proved problematic, including Falmouth Harbour.
(Autumn Statement, paragraph 1.99.)
Review of the planning appeal procedure
The government recognises that there are opportunities to improve the planning appeal process for all parties. The government will seek to make the planning appeal process faster and more transparent by summer 2012. The government will:
Focus on streamlining the Inquiry Procedure Rules.
Look at pre-appeal engagement.
Look at greater use of electronic communications to improve the handling of appeals and to speed up the sharing of documents between parties
(Autumn Statement, paragraph 1.100 and NIP 2011, paragraphs 6.22 to 6.24.)
For background information on planning appeals, see Practice note, Planning appeals: written representation, hearing or local inquiry? ( www.practicallaw.com/1-385-2973) .
Consultation to allow the reconsideration of planning obligations agreed before April 2010
The government announced that it will consult on proposals to allow the reconsideration of planning obligations agreed before April 2010 where development has stalled. The consultation will be issued in December 2011/January 2012.
(Autumn Statement, paragraph 1.100.)
Consultation to allow agricultural buildings to be used for other purposes
The government announced that it will consult on proposals to allow existing agricultural buildings to be used for other purposes such as offices, leisure and retail space. This is to make it easier for rural businesses to find premises when they need to expand.
Under section 59 of the Town and Country Planning Act 1990 (TCPA 1990) and article 3 of the Town and Country Planning (General Permitted Development) Order 1995 (SI 1995/418) (GPDO 1995), planning permission is granted for a wide range of developments on agricultural land. The agricultural user exemption in section 55(2)(e) of the TCPA 1990 permits the use of existing buildings for agricultural purposes without planning permission.
"Agriculture" is defined under section 336(1) of the TCPA 1990 as including horticulture, fruit growing, seed growing, dairy farming, the breeding and keeping of livestock (including any creature kept for the production of food, wool, skins or fur, or for the purpose of its use in the farming of the land), the use of land as grazing land, meadow land, osier land, market gardens and nursery grounds, and the use of land for woodlands where that use is ancillary to the farming of land for other agricultural purposes.
Currently, if a building is erected under the GPDO 1995 and then ceases to be used for agricultural purposes within ten years of its completion, the building must be removed unless planning permission is given within three years for agricultural purposes (see PPS 7: Sustainable Development in Rural Areas (ODPM) ( www.practicallaw.com/2-106-8427) ).
(Autumn Statement, paragraph 1.100 and Annex A, paragraph A.57.)
The government announced that it will introduce new permitted development rights for non-domestic microgeneration of electricity.
(Autumn Statement, Annex A, paragraph A.58.)
Residential property already has permitted development rights for certain microgeneration equipment (see Legal update, General development rights for microgeneration equipment on residential property ( www.practicallaw.com/0-381-0318) ). The government consulted in December 2009 on permitted development rights for small-scale renewables for both domestic and non-domestic properties (see Legal update, Consultation on permitted development rights for small scale renewables (domestic and non-domestic) (England) ( www.practicallaw.com/3-500-8462) ). For more information on the government's policy and strategies for microgeneration, see Practice note, Microgeneration ( www.practicallaw.com/2-385-0884) .
National Infrastructure Plan
The government has published National Infrastructure Plan 2011 ( www.practicallaw.com/8-514-1369) (NIP 2011) alongside the Autumn Statement. We have summarised below areas that will be of particular interest to property practitioners. PLC Property will cover NIP 2011 in more detail.
For background information on its predecessor, NIP 2010, see Practice note, Government publishes National Infrastructure Plan 2010: construction, environment and property implications ( www.practicallaw.com/4-503-7181) .
NIP 2011 highlights that the government plans to:
Improve road, rail, airport and port infrastructure (NIP 2011, paragraphs 2.3 to 2.4 and 3.1 to 3.58).
Increase superfast broadband and mobile coverage (NIP 2011, paragraphs 2.18 and 3.91 to 3.112).
Maintain the performance of the water and sewerage system, whilst reducing its environmental impacts (NIP 2011, paragraphs 3.113 to 3.125).
The government will support the water industry in implementing a programme of investment. However, the costs associated with the transfer of private sewers are not included within the programme of investment and there could be higher customer bills. For more information on the transfer of private sewers, see Legal update, Ofwat finalises guidance on the transfer of private sewers ( www.practicallaw.com/7-507-1611) .
Mitigate the impact of flood and coastal erosion (NIP 2011, paragraphs 3.126 to 3.136). For more information, see Practice note, Flood and Water Management Act 2010: Flood and coastal erosion risk management ( www.practicallaw.com/6-501-1482) .
Reduce the amount of carbon used in supplying heat to buildings. NIP 2011 notes that an application has been submitted for a new nuclear power station (NIP 2011, paragraphs 3.59 to 3.90).
Improve the planning system for waste infrastructure projects (NIP 2011, paragraph 3.148).
Planned projects and timeframes
NIP 2011 contains details of planned projects and timeframes (NIP 2011, Annex C). For example, the government will announce whether it will proceed with High Speed 2 (see Practice note, Proposed high speed rail link between London and Birmingham ( www.practicallaw.com/8-502-0800) ).
The government's Plan for Growth: Implementation update (29 November 2011) ( www.practicallaw.com/2-514-1409) states that every quarter, the government will publish a rolling two year forward programme of infrastructure and construction projects where public funding has been agreed (NIP 2011, paragraph 115).
The government intends to adopt an integrated approach to infrastructure and housing planning, through the following measures:
Reforms to the planning regime (NIP 2011, Chapter 6). For more information, see Planning reform.
Stronger incentives to promote growth through the New Homes Bonus (see Legal update, New housing strategy launched: New Homes Bonus ( www.practicallaw.com/8-513-5368) ), and proposals to allow the retention of business rate receipts.
Implementation of the Housing Strategy (see Legal update, New housing strategy launched ( www.practicallaw.com/8-513-5368) ).
(NIP 2011, paragraphs 4.23 to 4.27.)
Application to Scotland, Wales and Northern Ireland
NIP 2011 is relevant to investment in reserved areas of infrastructure in Scotland, Wales and Northern Ireland. The Scottish Government, Welsh Government and Northern Ireland Executive are responsible for infrastructure plans where infrastructure policy is fully or partially devolved (NIP 2011, paragraphs 3.156 to 3.170).
(Autumn Statement, paragraphs 1.86 to 1.97.)
Farming Regulation Task Force
In June 2010, the Minister of State for Agriculture and Food established the Farming Regulation Task Force as part of the government’s Growth Agenda.
The role of the Farming Regulation Task Force was to report to government on ways of reducing regulatory burdens on farmers and food processors. The report, published on 17 May 2011, recommended more than 200 ways of reducing unnecessary "red tape".
The government accepts a number of the recommendations of the task force.
(Autumn Statement, Annex A, paragraph A.113.)
Exempt Organic Farmers from Nitrate Regulations
The government will consult on exempting organic farmers from regulations controlling the use of nitrate-based fertilisers.
Currently, the Nitrate Pollution Prevention Regulations 2008 (SI 2008/2349), which came into force on 1 January 2009, impose restrictions on the use of organic fertilisers with high nitrogen content. The aim of these rules is to reduce water pollution caused by nitrates from agricultural sources and to prevent such pollution occurring in the future. The Regulations apply to all land that is within a Nitrate Vulnerable Zone.
Recognise Third party Certification Schemes
The government will recognise third-party certification schemes, such as the Red Tractor ( www.practicallaw.com/8-514-2509) with the aim of reducing compliance burdens on agricultural businesses. The Red Tractor logo now appears on the packs of nearly £5 billion worth of British Food. The mark indicates that the food can be traced back to farms producing under an Assured Food Standards (AFS) licence. The red tractor mark indicates compliance with specific food assurance schemes registered with AFS.
(Autumn Statement, Annex A, paragraph A.113.)
Rural Community Renewable Energy Fund
The government announced that it will launch a £15 million Rural Community Renewable Energy Fund to help communities meet the up front cost of developing renewable projects.
Around one third of rural households are not connected to the national gas grid and are reliant on other fuels such as heating oil, LPG and electric heating, which tend to be more expensive. Also, many rural properties are old and difficult to insulate, which can impact on fuel costs in rural communities. The Department for Environment, Food and Rural Affairs (Defra) is working with the Department of Energy and Climate Change (DECC) to make sure efforts to promote the efficient use of energy and tackle fuel poverty take account of rural needs. The government is committed to Delivering Green Growth and as part of the Rural Economy Growth Review it announced that Defra and DECC will be launching a £15m fund to help communities tap into the renewable energy potential of rural areas.
(Autumn Statement, Annex A, paragraph A.117.)
Health and safety: review of regulations
The government has accepted the recommendations of Professor Löfstedt's review of health and safety regulation including:
Exempting self-employed people who pose no risk to others from health and safety legislation.
Simplifying guidance and codes of practice.
Making health and safety legislation consistent and predictable, so that businesses have certainty. This includes a power for the Health and Safety Executive (HSE) to direct all local health and safety regulatory activities.
The HSE taking steps to clarify the legal position of businesses to ensure they are only held accountable for what they can realistically manage.
The HSE negotiating a risk and evidence-based approach to health and safety regulation with the EU.
(Autumn statement, paragraph 1.113.)
Progress on the Plan for Growth
In March 2011, alongside Budget 2011 ( www.practicallaw.com/9-505-3786) , the government published The Plan for Growth ( www.practicallaw.com/4-505-3864) , which set out reforms in areas that act as barriers to enterprise.
The government has published The Plan for Growth: Implementation update ( www.practicallaw.com/2-514-1409) . This reflects measures included within the Autumn Statement, but also provides an update on other matters. For more information, see Legal update, Progress on implementing the Plan for Growth ( www.practicallaw.com/4-514-2530) .