Commercial property reacts with cheer and frustration to Budget
While the headline writers were busy with the Chancellor’s introduction of 7% stamp duty on houses over £2m, the commercial property industry was also getting to grips with other parts of his Budget speech yesterday.
The British Property Federation said the Budget contained cause for cheer, saying it had successfully lobbied for the stamp duty not to be extended to commercial property, and welcoming a consultation on the simplification of green tax (the Carbon Reduction Commitment or CRC) and confirmation of the imminent NPPF (New Planning Policy Framework). However, it was also a source of frustration for the BPF, which was disappointed with the “small beer” TIF proposals and a lack of Mortgage REITs to support bank deleveraging, and no change on empty property rates relief.
BPF chief executive Liz Peace said the federation was looking forward to the publication of the NPPF next Thursday. The framework will retain the presumption in favour of sustainable development, which the BPF has supported “from the outset”, she noted. She added that the review of the CRC for business was welcome, but said it was self-evident that the fiscal element “should be rationalised to a simple retrospective tax on the carbon associated with building energy consumption”.
The BCSC agreed that the CRC move was welcome, but said it would only be effective as part of a “wholesale review” of green policies, including the Green Deal and feed-in tariffs. The shopping centres body repeated its call for a review of business rates, saying their rise to 5.6% this April would “undoubtedly see businesses fail”. It added that the Chancellor’s reference to £150m of TIF remained unclear and it would be waiting for further detail before commenting on how effective it might be in accelerating infrastructure development.
Among property agencies there was a rush last night to exchange on residential deals before the midnight deadline for the new stamp duty measures. At Savills, director Lucian Cook noted that there were some concerns that the measure imposing a 15% rate on houses bought through corporate vehicles could “stifle important investment in the prime central London market, particularly from those who own through a corporate vehicle for reasons other than stamp duty avoidance”.
Head of planning and regeneration at Savills, Roger Hepher, said the Chancellor had raised hopes regarding the NPPF; he was encouraged that he had confirmed the presumption in favour of sustainable development and that it would come into force immediately. Colin Wilson, head of DTZ UK and Ireland, said questions remained as to the impact of the NPPF, given recent cuts in local authority planning resources “and the potentially obstructive impact of ‘localism’”. He felt the Budget’s overall effect on occupiers in the medium term was encouraging, and said the additional cuts to corporation tax, reduction in the highest rate of income tax and consultations on long-term bond issues were “positive signs which will underpin confidence in the UK as a stable place to do business”.
At Jones Lang LaSalle, Abigail Dean said the simplification of the CRC was to be welcomed, but felt it would be a “real challenge” for the scheme to be simplified enough to lead to the significant savings in administration costs that the government was targeting. “If it is to be scrapped, it is likely to be replaced with a significant increase in Climate Change Levy and mandatory carbon emissions reporting for listed or large organisations,” she added.
Richard Wackett, national head of rating at Lambert Smith Hampton, said the Budget did not go far enough. “Property owners, developers and potential occupiers will continue to be reluctant to build and occupy new space given the level of business rates which remain linked to a historical valuation date,” he warned.
He called for a number of measures to deal with the issues facing the commercial property industry, including: a suspension of empty rate charges on new projects to encourage new speculative development; 100% rate exemption within Enterprise Zones for a limited initial period; the abolition of downwards phasing in England; centrally funded hardship relief for business for a maximum of a year; and centrally funded discretionary reliefs for businesses holding partially occupied premises.
