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NLA analysis: Pre-Budget Report 2007

from "UK Landlord" magazine, January 2007

Richard Gard, NLA Policy Officer, reports on how the successful lobbying to-date by the NLA's Policy Unit has resulted in key changes in position of the Government in relation to energy efficiency.

Gordon Brown issued his 10th pre-budget report on 6th December 2006. If Mr Brown's personal ambitions go according to plan, and barring a severe political upset they will, this will be his last as Chancellor and will also provide the economic platform for his period as Prime Minister.

The Government and indeed the Chancellor himself had been widely trailing the contents of the report in the media over the previous few days. We must all have been aware that this report was to be the precursor to the "Green Budget" with the Chancellor claiming that he had taken notice of the Stern Review and the Eddington Report which both looked at the impact of climate change and came up with some suggestions on what to do about it.

With great flourish the Chancellor set out his stall by declaring "a great economic mission of our time, to meet the global challenge to unleash the potential of all British people so that the British economy outperforms our competitors - and deliver security, prosperity, and fairness for all."

General Economic Situation

Hyperbole aside the Chancellor was able to state that economic growth in the UK would out-perform his previous predictions and rise from 2.75 per cent to 3.25 per cent in 2007. In general terms the Chancellor emphasised the long period of economic growth the UK has enjoyed and announced that the Treasury predicts that the economy would continue to grow into the 39th and 40th successive quarters.

Mr Brown expects the inflation figure to reach its 2 percent target by mid-2007 and to continue at that level in 2008. Borrowing which currently stands at £37 billion is predicated to fall as tax revenues increase.

Stamp duty on transfer of shares will remain - not surprisingly given the fact that it provides £3 billion pounds per year to the Exchequer.

Housing

Mr Brown announced a plan to work towards a target that that within ten years every new home built in the UK would be carbon-neutral.

These homes would be eligible for zero per cent stamp duty for a limited time - though for how long is unclear. This may well prove to be an overly ambitious plan.

The independent planning body recommended in the Barker recommendations will be established. The body will analyse and adjudicate on "strategic decisions on location and planning permission for major infrastructure projects". The liberalisation of the planning regime to speed up the process and free up previously excluded Green Belt land will be implemented.

We wait to see how the exact proposals under the Planning Gain Supplement Bill - Land Tax by another name - will the affect the housing market.

What was in it for Landlords?

In an important development, the Pre Budget Report announced a number of concessions on energy efficiency with regard to landlords. The statement marks a lobbying success for the NLA.

No Changes to Wear and Tear Allowance

The NLA has consistently argued against proposals by the Treasury that access to the Wear and Tear Allowance would be made dependant on the energy efficiency rating of a property. The original plans were that a landlord's ability to receive the existing wear and tear allowance may be reduced if the property were less energy efficient. This would be done on a graduated scale. We are pleased that the Government has listened to the persuasive points we put forward and shelved the plans.

Landlords Energy Savings Allowance LESA

As readers will remember from the suite of articles on energy efficiency in our September/October 2006 edition of UK Landlord, the LESA is a £15 00 tax allowance on certain types of energy efficiency measures. The NLA position is that we would like to see the LESA available to any energy efficiency measure and we would like to see the allowance level raised and we would like the allowance available per property rather than per building. The concessions announced by the Government as part of the fledgling Green Landlord Scheme are a move in the right direction and we welcome them.

They contain three key elements for landlords:

• The life of the LESA has been extended from 2009 to 2015 ; we had feared it might be withdrawn completely in 2009.
• The allowance has now been extended to cover each property.
• The extension of the Allowance will include floor insulation.

These changes to LESA and the Wear and Tear Allowance proposals are a vindication of the work of the Policy Unit at the NLA.

Numerous briefings to civil servants and the Energy Savings Trust, representations to the Parliamentary Renewable and Sustainable Energy Group, not to mention the lead role of energy efficiency in our political party conference strategy, have all persuaded the Government to listen to our recommendations.

Rugg Review:
The Independent Review of the Private Rented Sector has been published. See how it affects you.

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