Property industry reacts to Autumn Statement
The British Property Federation has welcomed the news in the Chancellor’s Autumn Statement on Wednesday that all newly-built commercial property completed between 1 October 2013 and 30 September 2016 will be free from Empty Property Rates for the first 18 months (subject to aid limits). The BPF also says the property industry will “breathe a collective sigh of relief that calls for further taxes on property fell on deaf ears”.
Liz Peace, chief executive of the BPF, said the decision on new build property was a “good result” after months of hard work behind the scenes with MPs and the Treasury. “As ever the devil will be in the detail and we look forward to participating in the consultation,” she added, noting that some areas would require a closer look, particularly relating to state aid and how new-build would be defined “in a world where, outside London, most commercial activity is refurbishment and redevelopment rather than completely new development”.
At Lambert Smith Hampton, national head of rating Richard Wackett said the proposal did not go far enough, adding: “We would have hoped to see the empty property rates relief also applied to older properties and the grace periods for commercial and industrial premises stretched much further than the three- and six-month periods (respectively) which currently apply.”
“Furthermore,” he noted, “this relief does not apply for another year and that is too late. Measures like this need to be introduced earlier to give the economy a much needed boost.”
Turning to the proposed simplification of the Carbon Reduction Commitment (CRC), the BPF said the removal of the performance league table was to be welcomed, as well as the Government’s intention to start with listed companies before extending the scheme more widely.
“With the Chancellor warning of a ‘fiscally neutral’ Autumn Statement, avoiding further taxation and winning targeted empty rates concessions was perhaps as much as we could have hoped for,” she added. The BPF’s full response can be seen here.
CBRE’s head of UK and EMEA research, Dr Neil Blake, noted that much of the downgrading of GDP estimates for 2012 reflects the “parlous state of private-sector construction”. He pointed out that commercial and industrial construction has actually been responsible for a much bigger share of the fall in UK GDP since the start of the recession than private-sector housebuilding. “Almost 50% of the loss in UK economic output since the beginning of 2008 can be attributed to a drop in private construction activity,” he added.
CBRE has called for the introduction of policies to kick-start construction to assist recovery. “Clearly, anything that simplifies and speeds up the planning process helps, and policies that assist the financing of the sector would be a positive move. If it does not, the construction sector will continue to act as a major drag on the economy for some time,” Dr Blake cautioned.
He also said it was “imperative” that the Government reconsidered the planned inflation-linked increase in business rates. CBRE’s head of retail consultancy, Jonathan de Mello, added that the Government’s decision to postpone the re-evaluation of business rates to 2017 was a “mistake”, with retailer administrations and store closures this year at a level unmatched since 2008.
“Given how far rents have dropped in the UK’s more challenged high streets, business rates in some locations can be higher than rents. It is absurd that the government makes more money out of a property than the owner of the property themselves,” he declared. He suggested that the Government could decide not to increase business rates in line with inflation until the 2017 re-evaluation, if it did not want to go back on its earlier decision. “This would not fully stem the rise of administrations we have seen, but would certainly slow it down,” he added.
