Budget 2012: Planning reforms and stamp duty

THE Government’s controversial planning reforms will protect the "most precious environments" in the country, the Chancellor George Osborne insisted today.

THE Government’s controversial planning reforms will protect the "most precious environments" in the country, the Chancellor George Osborne insisted today.

But his comments on the new planning system, which will come into effect as soon as it is published next week, prompted renewed concerns that the majority of England’s countryside will be at risk from damaging development.

A bitter battle has raged over the plans to slim down more than 1,000 pages of planning guidance to just 50 since a draft version of the document was published last summer, amid fears it could lead to a return to urban sprawl.

Announcing that the final version of the national planning policy framework would be published on Tuesday, Mr Osborne said the central theme of the overhaul - a ``presumption in favour of sustainable development" - would stay.

Highlighting the pro-growth agenda which has driven the bid to reduce the planning framework, he said the move was the "biggest reduction in business red tape undertaken".

He warned: "Global businesses have diverted specific investments that would have created hundreds of jobs in some of the most deprived communities in Britain to countries like Germany and the Netherlands, because they couldn’t get planning permission here.

"That is unacceptable."

He said the new planning arrangements would come in with immediate effect, prompting concerns that local authorities which had not already drawn up "local plans" to steer development in their area would be forced to approve all schemes under a requirement to operate a default "yes" to development.

Adam Royle, spokesman for the Campaign to Protect Rural England, said Mr Osborne’s reference to protecting "the most precious environments" could spell bad news for the wider countryside.

"From the Chancellor’s words we fear the long-standing protection for the wider countryside will be abandoned.

"That would mean that 55% of English countryside, including many locally loved green spaces, could be placed at the mercy of developers.

"Also extremely worrying is the suggestion that communities may not be given any time to ensure their local plans conform to the new framework.

"This could leave more then one third of areas that don’t currently have a plan exposed to a crude ’presumption in favour of sustainable development’."

Friends of the Earth’s executive director Andy Atkins said: "Osborne says new planning rules will protect our most precious environments but unless they address the environmental challenges we all face, ministers will pave the way for a development free-for-all that will cost us all a fortune in the long run.

"Bringing in the changes will put local plans at risk and allow developers to ride roughshod over local communities."

Estate agents have warned a stamp duty raid on £2 million homes could hit all homeowners and buyers by triggering a slowdown in the areas of the property market which have been vital to supporting prices.

Chancellor George Osborne announced a stamp duty rate of 7% on homes costing £2 million or more from midnight tonight, which will mostly affect buyers in London, an area which has been key in supporting the market by recording consistent price growth due to strong overseas buyer interest.

Estate agents said the Chancellor risks "killing the goose that lays the golden egg" at a time when much of the housing market remains flat elsewhere.

The Chancellor said it is "fair when money is tight, and so many families could do with help, that those buying the most expensive homes contribute more".

But Peter Rollings, chief executive of estate agent Marsh and Parsons, said: "Not only will this policy disproportionately target London, where house prices are in a league of their own, it risks killing the goose that lays the golden egg.

"With the property market still far from healthy, we need to see the Government supporting activity at all levels, rather adding yet another tax burden."

London homes have been vital in keeping average prices up, with the capital often viewed as the most ``healthy" and stable area at a time when the housing market generally remains weak and patchy.

London asking prices have reached a high of £455,159, up 7.3% year-on-year, Rightmove found this week, while the typical asking price for homes in Kensington and Chelsea broke the £2 million barrier for the first time. The Midlands, Wales and the North West saw prices dip year-on-year.

Of the 2,834 homes sold in England and Scotland in the last two years for more than £2 million, 2,059 were in London and just two were in Yorkshire and the Humber, according to property website Zoopla.

The National Association of Estate Agents (NAEA) said the Government had missed an opportunity to completely overhaul the ``outdated" stamp duty system, a tax which is seen as causing distortions in the market.

NAEA president Wendy Evans-Scott said: "To reinvigorate this struggling market will require specific stimulus across the entire housing spectrum to help people buy and sell homes, not further penalties on those able to do so."

Former NAEA president Trevor Kent said every homeowner would be hit by the new top-end tax, with 70% of first-time buyers relying on the progression of a ``chain" of sales.

He said: "Higher stamp duty always results in property price pressure, in this scenario there is little doubt that prices will fall across the board. Some may think ’great’, but mortgage lenders will not - they rely on the expectation of a gentle long-term rise to safeguard their loans."

Mr Kent predicted that lenders would generally start demanding higher deposits to protect themselves if prices dipped.

According to Land Registry figures, 121 homes were sold in November for more than £2 million, the latest month for which the figures are available, 98 of which were in London.

Around 45,000 homes in England and Wales are thought to be worth at least £2 million, with eight out of 10 in London.

David Newnes, director of LSL Property Services, owners of chains Your Move and Reeds Rains, said stamp duty increases were "likely to cause activity to ease down".

Mr Newnes said: "George Osborne clearly feels the number of cash buyers for properties at the higher end - especially prime properties in London which have driven price growth in the capital over the last year - means buyers have enough ready funds to support stamp duty at 7%.

"The proof will come in the next few months, but with growing barriers to entry, this decision will give the foreign investors who are driving forward the prime market pause for thought as they look to property as a way of protecting their assets rather than increasing their tax exposure."

Sue Foxley, head of research at Cluttons, said London buyers could be driven to move elsewhere.

She said: "There is a massive shortage of family homes in London’s villages and given price growth expectation, growing demand will push average three and four-bedroom family homes in many areas such as Islington into the top stamp duty tier within a year or two, making it even harder for families to commit to staying in the city."


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