BPF response to Budget 2017

22 Nov 2017

Policy area: Finance and regulation

Ion Fletcher, Director of Finance Policy, British Property Federation comments:

Capital gains tax:

“The UK is particularly good at attracting overseas investment capital, much of which goes towards regenerating our towns and cities. Not only does this result in better places to live and work, it supports thousands of jobs in industries as varied as construction and leisure. We are deeply concerned that the Chancellor’s announcement on Capital Gains Tax, which will now apply to non-resident investors, will jeopardise this much needed investment. There is, however, an envisioned exemption for institutional investors, which will need to be carefully considered to ensure investment keeps flowing to the UK.”

Business rates:

“The BPF was one of the signatories to the letter to the Chancellor asking for business rate reforms to be brought forward. We are delighted that this has been listened to and that the change to CPI and more regular revaluation will be felt sooner by businesses across the country. It looks like business rates self-assessment, which had seemed the government’s preferred approach, is off the table for now.”

 

Patrick Brown, Head of Insights and EU Engagement, British Property Federation comments:

Brexit:

“An early announcement in the Budget, but one that is significant. A few weeks ago, the Chancellor dismissed suggestions of additional Brexit-proofing spending by Cabinet colleagues. However, today’s announcement suggests a rethink and some shoring up is underway.  Pertinently, the way that money will be spent is to be determined via departmental allocations at a later date, but the Budget gave a heavy hint that innovation and productivity are seen as being a key way to enhance and preserve the UK’s global competitiveness.

“For us this is a correct focus, and boosting the resilience and productivity of places up and down the country will be key to weathering any negative effects of Brexit. The government can do much to unlock the economic and social benefits that development can bring by improving the efficiency of processes by which buildings are delivered, such as public procurement and planning. We look forward to hearing more about the government’s plans in the Industrial Strategy White Paper, expected next week.”

 

Ian Fletcher, Director of Real Estate Policy, British Property Federation comments:

Housing:

“The housing crisis didn’t happen overnight and won’t be solved in a day. We welcome the commitment from the Chancellor today to long-term solutions, and actions that seek to take that commitment forward. What excites us is the commitment to infrastructure, the opportunities that places like Oxford-MK-Cambridge will provide, and the more flexible use of government support through measures like guarantees, to support housing delivery.

“The new ‘Homes England’ will have a central role in increasing delivery and it is vital it gets the support of public and private sectors, if all our aspirations are to be met. We have promoted three year tenancies in the Build-to-Rent sector and will therefore be engaging positively in providing tenants with that choice via the promised consultation.”

SDLT:

“We welcome the Chancellor’s support for first time buyers, exempting them from SDLT on purchases of up to £300,000. However, the bigger prize is to use changes to SDLT strategically to stimulate supply, which the Chancellor has failed to do in his Budget this year. SDLT is a transactional tax, an explicit barrier to social mobility, putting people off moving house. It’s also deterring investment into housebuilding, which ultimately has a knock-on effect on the volume of affordable housing provision.

“While we are delighted with the recognition and support now being given by the government to the build-to-rent sector, the 3% SDLT surcharge remains an unnecessary and counter-productive barrier to a sector with billions of pounds available to deliver high-quality rental homes. If the Chancellor is not brave enough to abolish it completely, then the first priority should be changing the guidelines that homes built for affordable private rent (the rental version of affordable housing) are subject to the 3% SDLT surcharge. The chancellor should cut the surcharge for this tenure to encourage the provision of greater levels of accessible homes.”

Land value uplift – Community Infrastructure Levy (CIL):

“We look forward to working with government on its land value uplift proposals. While we understand government wants to maximise the amount of money coming in to pay for infrastructure, this has to be done in a transparent way. Government must also ensure that developers are fully consulted on from the very beginning.

“CIL is currently perceived as a problem and unless it becomes a more transparent tool, it could hamper investor and developer confidence. We would like to see any reform learn from the original Mayoral CIL, which is widely seen as a success by both the public and private sectors.”

Planning departments:

“We are pleased that the government accepts that the housing challenge is now at the top of its agenda and has announced several measures that should help speed up the planning process. However, in order for these measures to be successful, planning departments need to be adequately resourced or we will end up in the same situation we currently find ourselves in. We look forward to hearing what the Secretary of State for the Department of Communities and Local Government has to say in the coming days and are ready to work with the government on all proposals that come forward.”

Sustainability:

“The announcement of a new Clean Air Fund is welcome news, and local authorities should think innovatively about how they can improve air quality. Given the strategic powers of regional mayors, it would be helpful to see them encouraged to take a leading role in this and to work together across local authority borders. We also await more detail on how this fits with the priorities in the Clean Growth Strategy.

“Following the publication of the Automated and Electric Vehicles Bill, Government is continuing with its support for low-emission vehicles. A significant increase in the number of charging points will have implications for how developments are designed, as well as for the opportunities for freight and logistics. While installing charging points along the Strategic Road Network will encourage wider uptake of electric vehicles, often investment is needed on smaller, individual developments and we would like to see some of the new Charging Investment Infrastructure Fund allocated to these.

“Clarity on carbon pricing is welcome, given that the price differs across a number of policies depending on the payer. However, not raising the price may be a missed opportunity to incentivise energy efficiency and low carbon generation.

“We look forward to working with government on improvements to the exemptions to the Climate Change Levy for landlord-tenant situations, and seeking clarity on the definitions.”

Infrastructure:

“Poor connectivity between cities, particularly in the north of England, is a huge barrier to growth and is a constant complaint of businesses and investors in the region. The £1.7bn Transforming Cities Fund is a significant sum and provides real opportunity for metro mayors not only to invest in transport projects in their own regions, but also to work together for the benefit of greater investment and productivity.

“It's good to see that the National Infrastructure Commission will be focusing on freight, particularly given the concerning comments in the draft National Infrastructure Assessment that there is limited opportunity to move more freight from road to rail. The urban logistics sector is in a period of huge growth and any focus needs also to consider the impact on planning and air quality policies.”

Devolution

“It's great to see the devolution agenda continue full steam ahead, with new funding confirmed and a new deal agreed with the North of Tyne to include a new regional mayor with powers over planning and skills. The announcement of a second agreement with Andy Street for the West Midlands comes as no surprise, and its focus on construction skills and transport priorities will allow the region to the harness the opportunities presented by the imminent arrival of HS2.

“Government working with Greater Manchester on a local Industrial Strategy is likely a thing of signs to come, and it will be interesting to see to what extent this deviates from the national version – and whether there will be scope for local, or regional, Sector Deals.”