Property Roundtable Autumn Session
September brings not only a return to the classroom for students, but also a return of the Property Industry Roundtable. The Autumn session took place on 24th September and was hosted by Steph Richards.
Impact of the temporary SDLT rates across the property industry
As noted in our recent article, as part of their Covid response the government has announced a temporary reduction in the rates payable in respect of Stamp Duty Land Tax (SDLT) until the end of March 2021. Since our last roundtable discussion back in the summer it has been noted, both anecdotally and in the latest figures from HMRC, that residential sales are booming. This is likely a combination of pent-up demand from the period of strict lockdown, coupled with an invigoration in the sales market owing to the SDLT cuts. One notable exception (purely anecdotally at this stage) has been a slower response in the leasehold market – particularly affecting flats with no garden.
As a reflection of this the participants revealed that there is an increased focus on schemes which include access to outdoor space, with blocks of flats seeing a move to an increase in roof terraces and balconies.
It remains to be seen how much of a bubble is being created through the temporary SDLT measures, but with the ending of the furlough scheme many lenders are reducing the acceptable loan to value ratios, so purchasers are finding that higher deposits are being required by lenders in order for their application to reach the new lending criteria.
Change in the Help to Buy Scheme
Another key policy change in recent months has been the release of further detail in relation to the Help to Buy Scheme. The current scheme will end on 31 March 2021, and any buildings qualifying for sale under the scheme will need to be practically complete by the end of February (unless they have benefitted from the limited extension of the scheme for those development which experienced a delay owing to Covid-19 where a reservation was in place before 30 June).
With applications for the new scheme opening in autumn, many current developments are looking at the new scheme, particularly with regard to site-set ups. A key feature of the new requirements is that leasehold properties will need to be let on a nominal “peppercorn” rent. It is anticipated that this will impact the ground rent being charged on new developments generally, as it will be unknown which plot(s) will be reserved by a buyer using the help to buy scheme and which will be purchased without the assistance of the scheme.
Permitted Development Planning Rights
Talk also moved towards the potential impact of the increased permitted development rights. This year we have seen significant changes to what development can fall within permitted development rights, with 2 additional storeys now permitted on both purpose-built flats and existing dwellings (subject to additional criteria being met). As permitted development does not require a formal planning application to be submitted (only a notice for prior approval) the absence of a formal planning consent will avoid the need to make contributions under S106 planning agreements. While it is inevitable that some will use these new rights, the panel anticipate that permitted development rights will form the basis of discussions between developers and local authorities. This may give rise to better conceived schemes given lower appetite for risk across the property industry, and higher thresholds to satisfy panning and lenders. It is anticipated that this will result in better developments which have more kerb-appeal for developers (increasing their saleability), and the opportunity to have a more fitting development on the part of the planning authority coupled with the ability to generate contributions to the local council under S106 provisions: hopefully a win-win situation.
Given the continued pressures on the hospitality sector, particularly as we are on the approach to the Christmas season, the panel considered whether we will be seeing an increase in cross-over uses for existing space, such as hotels allocating former conference space into co-working spaces. Doubtless there will be noticeable change in this sector in the coming months.
The next Property Roundtable
The winter session of the Property Roundtable will take place on Thursday 17th December and details can be found here. If you are interested in participating in the next session, or if there is a subject that you would like to discuss, please contact Steph Richards on firstname.lastname@example.org.
This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter
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