BPF response to Budget 2018

29 Oct 2018

Melanie Leech, Chief Executive, British Property Federation comments:

Business Rates

It is good to see the Chancellor acknowledge that many small retailers are struggling against powerful headwinds and provide additional relief from business rates. However, today’s announcement does not change the fact that at almost 50%, the rate of business rates is simply too high for occupiers of all sorts. It is time to recognise that business rates are unsustainable in their current form and causing untold damage to our economy; time for a fundamental review.

Digital Tax

As the UK economy evolves, so must the tax system – and we welcome that the Government is taking steps to respond to this. However, this is not an alternative to much-needed support for our high streets, which still require urgent support in the form of fundamental business rates reform. They will also require local plans that can drive adaptation, incentives to encourage town centre investment and more flexibility around change of use and we are pleased that the Chancellor recognised this.

SDLT

Melanie Leech, Chief Executive, British Property Federation comments:

The Government should be careful in how it targets these measures that will be consulted upon in early 2019, as an additional surcharge on large-scale overseas investors could put investment in housing delivery at risk. We estimate that 22,000 build-to-rent homes, 15 per cent of the sector's pipeline, are reliant on funding from overseas investors such as pension funds. Making it more expensive for these institutions to invest won’t help deliver these much-needed homes.

Structures and Buildings Allowance

Melanie Leech, Chief Executive, British Property Federation comments:

A new tax relief for commercial property owners is a real surprise. It allows owners of commercial (not residential) property to deduct - over time - the cost of new buildings and refurbishment from their taxable profits. This move brings the UK more closely in line with the many other countries that already provide tax relief for the cost of building commercial property, making the UK more attractive to invest in.

Town centres and high streets

Melanie Leech, Chief Executive, British Property Federation comments:

The announcement of additional investment into a Future High Streets Fund is welcome, and when combining with the proposed planning reform and a High Streets Task Force has real potential to be a game changer for urban centres facing a change in the way that people shop, how they spend their leisure time, and where they want to live.

However, it’s crucial not to forget some of the other knotty issues that property owners have to grapple with. We support the proper use of CVAs to help businesses in genuine distress and are keen that CVAs continue to achieve these objectives. There is, however, increasing frustration about the practice of some recent CVAs. The BPF has called on Government to conduct an independent urgent review of CVAs.

Land value uplift

Melanie Leech, Chief Executive, British Property Federation comments:

We welcome the Government’s sensible, measured approach to land value uplift. In a noisy environment with multiple views on land value capture being aired, it is pleasing to see such a considered response providing more certainty for developers and local authorities, and enabling more infrastructure provision for local communities.

The Letwin Review

Melanie Leech, Chief Executive, British Property Federation comments:

We welcome Sir Oliver Letwin’s recommendations, and in particular, his focus on the need for a more diverse, multi-tenure approach to large sites. The benefits will be three-fold, both helping to address market absorption rates and deliver homes quicker and help to create more sustainable places home to different demographics, socio-economic backgrounds, fostering a greater sense of community. In addition, adding a tenure such as build to rent to a development site brings with it an investor with a long term interest.

The Review also recognised the skills crisis in which we find ourselves. Time is of the essence, and whilst we applaud the Government’s intention to take a few months to consider the response to the wider Review, this is an area in which we need urgent action to sure that we can hit the 300,000 target.