Today the Chancellor of the Exchequer, Philip Hammond, delivered the UK Autumn Budget Statement. We examine whether there was anything in the Autumn Statement that might directly affect the property market in Scotland.
Mr Hammond announced the establishment of a new £2.3bn Housing Infrastructure Fund to create the infrastructure for up to 100,000 new homes in high demand areas in England as well as announcing the continuation of the government’s existing Help to Buy schemes. It is worth mentioning here that the Help to Buy Scheme in Scotland is controlled by the Scottish Government so this announcement does not affect the Help to Buy Scheme in Scotland although it may give some pointers as to what the Scottish Government announces in its equivalent of the Autumn Statement on 16 December 2016.
As was widely reported by the Press prior to the Autumn Statement taking place, the Chancellor announced that landlords and letting agents would no longer be able to charge additional fees to tenants for items such as credit referencing checks, prior to tenancies commencing. Reaction to this announcement has been mixed amongst letting agents and bodies such as Shelter, but it’s important to note that this has actually been in place, in Scotland, since 2012. This announcement should therefore not have any impact on the property market in Scotland.
In line with the Autumn Statement’s focus on improving the infrastructure and productivity of the UK, the Scottish Government’s budget will increase by more than £800 million through to 2020-2021, with a view to giving it greater spending power to boost productivity and promote growth in Scotland. The decision as to how to spend this increase in the capital budget is up to the Scottish Government which has the opportunity to take its own investment decisions as well as using its own tax, borrowing and welfare powers.
City Deal negotiations will also begin with Stirling, while the Chancellor also indicated that a City Deal for Edinburgh would be agreed and that proposals from both Dundee and Perth would also be considered. A City Deal is an agreement between the UK government, the Scottish government and the local authorities, setting out how the region will create economic growth.
Mr Hammond closed his inaugural Autumn Statement as Chancellor of the Exchequer by announcing that it would actually be his last Autumn Statement. Beginning in 2017, the UK will only announce annual budgets in Autumn and hold Spring fiscal statements in response to the forecasts from the Office of Budget Responsibility, with any changes to tax and spending being restricted to the annual Autumn budget. This is welcome news as far as we are concerned as it reduces the frequency of substantial changes in the UK’s tax system and therefore the potentially unsettling effect on the property market.
While there was not much in the Autumn Statement that will directly affect the property market in Scotland, it does exist within the larger UK economy and significant changes that affect the overall UK economy do of course have a knock-on effect on the housing market in Scotland. However, we await with interest the Scottish Government’s draft budget on 16 December 2016 to see if they follow suit, or indeed announce any significant changes that will affect the property market in Scotland, with their plans for 2017-2018. We will of course keep you informed and report the outcome of the Scottish government’s draft Budget when it is announced.