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19 December 2016

King West

The Autumn Statement 2016

The Autumn Statement provides the Chancellor, Philip Hammond, an opportunity to update MPs on the Government’s plans for the economy based on the latest forecasts from the independent Office for Budget Responsibility (OBR).

The OBR's revised forecasts for the economy and the public finances were published alongside the Autumn Statement on Wednesday 23rd November.

Along with a plethora of financial, taxation and growth strategies, two notable announcements have piqued the attention of the King West team.

Firstly, the widely reported ban on letting agents charging fees to renters. Up-front fees haven’t been banned but rather the government has announced that it will consult on this in due course. The paper put forward for debate suggests that Letting Agents will no longer be able to charge renters fees, for example when they sign a new tenancy agreement. Presently, tenants can be charged fees for a range of administration, including reference, credit and immigration checks.

Chancellor Philip Hammond suggested, that shifting the cost to landlords would save 4.3 million households hundreds of pounds each. The move could spur competition as landlords, unlike tenants, can shop around for the cheapest agent.

The lettings industry has argued that administration has a cost and has pressed for stronger consumer protection through regulation of the sector, rather than a ban on fees, suggesting that landlords will recover the costs through increasing rents.

David Cox, managing director of the Association of Residential Letting Agents (Arla), said: "A ban on letting agent fees is a draconian measure, and will have a profoundly negative impact on the rental market. 

King West will continue to monitor this and is well placed to advise any landlords of the consequences and how the impact might be mitigated.

Secondly, the Chancellor committed to cutting corporation tax to 17% by 2020.

The main rate of corporation tax was already cut from 28% in 2010 to 20% and will be cut again to 17% by 2020, by far the lowest in the G20 and benefitting over 1 million businesses.

Since 2010, the Government claims to have put a business-led recovery at the heart of their plan, having already cut corporation tax from 28% to 20%, sending the message that Britain is open for business.

Mr. Hammond stated that his priority as Chancellor is to ensure that Britain remains the No. 1 destination for business, creating the investment, the jobs, and the prosperity to protect our long-term future.

For many rural businesses, these changes will be a considerable encouragement to consider changing their trading structure to become a limited company. King West has a range of specialists who can sort out valuation and tenancy issues to work with your accountants to facilitate incorporation of a business.

We would like to take this opportunity to send you our warmest wishes for Christmas and the New Year. We look forward to continuing our market commentary during 2017.

 

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