A SWEEPING package of measures designed to boost urban regeneration and breathe life back into some of Britain's most deprived inner-city areas was announced by the Chancellor. Six new tax relief measures are to be introduced to encourage landlords to convert property into accommodation and attract new investment into community initiatives.
Gordon Brown said he wanted to "release the untapped potential of cities".
All property bought in so-called "deprived areas" will be zero rated for stamp duty, no matter what the value of the transaction. Clarification of what constitutes a deprived area is awaited. It is thought that some 10 per cent of the country's inner city areas will be seen as deprived. But property experts pointed out that individual home purchases in poor areas were always likely to be zero rated, as they would be worth less than pounds 60,000.
Mr Brown also announced that there would be 150 per cent tax relief for developers who clean up contaminated land sites. The cost of making land site for residential use has prevented former industrial sites in cities being transformed to residential use.
It means that, in effect, the Government will bear about 45 per cent of the cost of the clean-up operation.
Additionally, the Chancellor said that VAT payable on the cost of converting properties to residential use will be reduced from 17.5 per cent to 5 per cent.
There will be 100 per cent tax relief for the money spent on converting space above shops to residential use. This also aims to increase the housing stock in city centres.
Peter Damesick, head of research at the property consultants Insignia Richard Ellis, said that he was surprised that the Chancellor did not reduce or abolish the rate of VAT on refurbishing run-down homes. New homes are already VAT exempt.
"The 150 per cent relief on contaminated land is significant but many of these other measures are tinkering at the edges," Mr Damesick said. …