Henry Pryor Says: Swings and roundabouts for Property in the Pre-Budget report

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The Pre-Budget report from the Black Adder styled 'Chancellor Darling' contained two significant announcements that affect property and property speculators.

The section on changes to Capital Gains Tax is a shot in the arm for buy-to-let investors and arm chair Sarah Beeny fans.

If they sell their property next April they will now only have to pay 18% on any capital gain they have made. As a result, notional returns on their investments have risen too although I predict a rush of property being marketed on and after 6th April next year as people dump their investments and cut their losses in what looks more and more to be a falling market.

The 'roundabout' however is the new 'Planning Charge' the Chancellor referred to. This is not the levy proposed by Kate Barker in her Housing Supply Review in 2004 but a new charge that Local Planning Authorities in England can apply to new developments along side the negotiated contributions that already exist for site specific matters such as landscaping or related local amenities via what are called 106 Agreements.

The result is that at a time when everyone starting with Ms Barker thought that what we needed was more housing more quickly, Yvette Cooper, the Housing Minister is now suggesting developers should pay a "new statutory planning charge"to obtain planning consent that will go towards funding unrelated projects. This is another charge for getting planning permission.

The charge will be set by the local authority and is to be calculated by reference to the infra-structure needs set out in the local plan.

There is no guidance as to how much the charge might be or what it will be related to - size, value or by complexity of the development so we don't know how much or when it will come in.

Whatever the size of this charge, it will obviously be passed straight onto the purchasers of the new properties and will therefore make houses more expensive. Since first time buyers are significant buyers of new property ironically, it will be they who end up paying more.

The Minister suggests that the bigger developers and industry groups have inputted to this but it remains to be seen how this development tax will help an industry already drowning in red tape and why local people can expect to see more housing being built quicker as a result.

This looks to be a classic case or robbing Peter to pay Paul and of civil servants being paid to make the whole lot go round.

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