UK Pre Budget Report - RICS response

SIPPs

Residential property will not be allowed to be included in pension plans from A-Day next year. Neither will fine wines, classic cars and antiques.

However, people may still be able to invest in residential property in pension funds through REITS, which are likely to be introduced in 2006. Draft legislation for REITS will be included in the 2006 Finance Bill.

Shared Ownership

Proposals for shared home ownership in the Chancellor’s pre budget report today (5 December) will help a small fraction of first time buyers.

But the scheme is so small that it will account for less than half of one percent of transactions per year, benefiting only 20, 000 buyers over five years.

If the Government is serious about addressing the affordability question there needs to be a massive uplift in construction, achievable only through a return to direct government involvement in house building and stimulating the private sector to build more. The decline in government sponsored housing over the last twenty years is the single most important factor in the affordability crisis for those most in need. Only 21,000 publicly sponsored homes were built last year, compared to 110,000 in 1980.

Planning Gain Supplement

The Chancellor also today announced his intention to consult on the Planning Gain Supplement. Plans to capture uplift in land values after planning permission is granted will not work. The idea of collecting uplift in value for funding local services and infrastructure is a viable one,  but a simple tariff is a much more practical approach.

RICS wanted a range of options to be consulted on. The decision shows a fundamental misunderstanding of how land markets work.

END

For further information and comment from professionals working in these markets, please get in touch.

Andrew Smith
RICS External Communications Manager
Tel  +44 (0)20 73343891
Mb  +44 (0)7786 177165
Fax +44 (0)20 73343722
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www.rics.org

RICS is the mark of property professionalism worldwide. It covers all aspects of real estate, property, construction and associated environmental issues. RICS has 120,000 members globally and represents, regulates and promotes the work of property professionals throughout 120 countries.