COMMENT: It seems almost churlish in a Budget that was both radical and far-reaching to describe it as having not gone far enough, but that was our general reaction on Wednesday.
The real estate sector is vital to driving local and national economic growth and, to echo Rachel Reeves’ own words, is primed to “invest, invest, invest”. Yet the announcements that were made could have been bolder and gone further to unlock investment, support the revitalisation of our high streets and turbo-charge the delivery of more homes.
The business rates burden continues to be unsustainable for businesses. While the chancellor acknowledged that retail, leisure and hospitality businesses were facing a cliff edge she reduced the relief they currently have, and the lower rate of relief will be funded by a higher rate of tax on more valuable properties.
It is really a case of robbing Peter to pay Paul, and the reduced support for high street businesses alongside the new employer taxes will hit hard. Continued tinkering with the business rates system is not a solution and the government has at least signposted the direction towards a reformed system. We want to see a system that imposes a lower tax burden on business and responds more quickly to changes in the economy. Reducing and fixing the tax rate and conducting more frequent revaluations would be a good place to start.
A need for bolder action
The government needs to be much bolder and go much further if it is to deliver on its ambitious house building target. We need a proper multi-tenure housing strategy which stimulates all parts of the market to fire on all cylinders. Build-to-rent is an increasingly important component of housing delivery, bringing in new investment, increasing choice and accelerating build out rates. Yet the chancellor missed the opportunity to reverse the abolition of SDLT multiple dwellings relief, despite the stalling effect it has had on the build-to-rent market over the summer, with evidence showing that around 1,500 homes haven’t progressed to date.
A cash boost for the Affordable Homes Programme and the proposed five-year rent settlement at CPI plus 1% for social housing are positive, but we want to see the government go much further and a 10-year rent settlement (at minimum) would provide greater certainty and reassurance to stretched housing associations and investors, and will in turn, lower the subsidiary requirement per unit.
There were some positives to take away including a commitment to several transport and infrastructure projects, which are critical to growth, productivity and unlocking opportunities within and between our communities.
We were also pleased to see the government’s commitment to greater devolution reinforced including the single settlements for the Greater Manchester and West Midlands Combined Authorities. Our sector has a huge opportunity as local government structures continue to evolve and to find even more innovative ways to work in partnership with regional and local authorities to support growth and stronger communities. We eagerly await the English Devolution Bill, expected to be published in the next month.
Planning officer boost is not enough
The Budget confirmed previous announcements of more resource for the planning system including 300 new planning officers. Of course, this is welcome but everyone recognises that it’s not enough to deliver the step change needed to provide the level of service applicants and communities should experience. We will continue to work with government, planning bodies and other stakeholders to try and find ways to attract and retain talent into planning as well as to streamline the process including through digitisation.
Real estate did not feature heavily in the Budget, but its impact on our sector will not truly emerge for some time as our occupiers weigh the impact of the business tax changes and renters the impact on household budgets and as investors consider what this Budget tells them about the political climate that will govern at least the next five years in the UK.
The jury is out.
Melanie Leech is chief executive of the British Property Federation.
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