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Property industry's reaction to Government's Autumn Statement6th December 2013

There has been a mixed reaction to the Government's Autumn Statement from the commercial property worldThere has been a mixed reaction to the Government's Autumn Statement from the commercial property world, with comments on the £1 billion loans to fund housing development, business rates, capital gains tax on non UK residents investing in property, H, with comments on the £1 billion loans to fund housing development, business rates, capital gains tax on non UK residents investing in property, Help to Buy and  stamp duty.

Leigh Richardson, Senior Director at property consultancy GVA in Bristol said: “The government does need to be congratulated for taking a wider look at the business rates system through putting pressure on the Valuation Office Agency to settle appeals more swiftly, targeting the difficulties of High Street retail on both occupied and vacant property, and for offering further support to small businesses.Although this represents positive action the real problem remains the government’s decision to delay the revaluation by two years to 2017. This is despite clear evidence that their decision last year was poorly thought through, inequitable and has undermined the rating system as a tax base. As a consequence, for a further two years rate liabilities remain based on a 2008 peak market and will continue to reflect none of the subsequent recessionary impact until 2017. Their decision has resulted in growing calls from strong lobbying groups for fundamental change to the business tax system and a shift away from a business rates. I question why fundamental reform, with all the uncertainty that then arises as to the big tax winners and losers, is necessary when a 2015 revaluation and more frequent later revaluations, to say three years, would put fairness back into the system."

James Pargeter, head of residential projects at Deloitte Real Estate, had this to say about the Chancellor’s announcement on housing supply: “The Chancellor’s Autumn Statement acknowledged that the UK housing market has 'started to normalise’. However, this improvement is from a low starting point and it is noted that current weakness of housing supply means continued strong growth in house building is needed. The headline message is that the Government will ‘take further action to increase housing supply’, but a closer inspection of the specific measures indicates that the residential sector will be left wanting more. One of the key measures will fund the development of infrastructure to unlock large housing sites. This £1bn fund appears to be new and sites mentioned in the speech are in Manchester and Leeds rather than the South-East. However, the funding will come in the form of loans and will be spread over six years, which many will feel is too diluted to make a really significant difference to overall UK supply. Nine sites have been identified in the first year, 2014-15.

Kersten Muller, real estate partner at Grant Thornton UK LLP, said: “This announcement on capital gains tax for non-UK resident investors selling residential property was not unexpected. The introduction in April 2015 should give plenty of time for adjustments so it should not have an immediate effect on the property market. Also, any changes will be subject to a consultation. It is worth bearing in mind that by trying to make it more difficult for overseas investors to invest into UK property we are potentially jeopardising the significant other economic benefits they bring when investing in UK real estate, which should not be underestimated.”

Jeremy Richards, head of Jones Lang LaSalle's Bristol office said: “While it’s a great relief to see the much predicted improvements to our economic prospects, businesses need to ready themselves for better times so greater support for development would have been useful, ensuring property supply moves in line with increased demand. However, there were encouraging moves in terms of housing, with the £1 billion investment in home building and increasing the Help to Buy scheme. Our precious High Streets should also benefit from rates cuts and relief for businesses taking on empty premises.”

Peter Girling, Chairman, Girlings Retirement Rentals said: "The Autumn Statement was a missed opportunity to address some of the biggest housing problems in Britain. While there were a couple of housing announcements – namely that people living overseas will have to pay Capital Gains Tax for future gains on second homes bought in the UK from April 2015 and the pledge of £1bn of loans to ‘unblock’ large housing developments, other big issues were overlooked. The Chancellor has demonstrated he is keenly aware that Britain has an ageing population - by raising the retirement age because of increased life expectancy, yet he continues to ignore the need for specialist retirement housing, currently in chronic short supply. Last week a report from the London Assembly’s housing committee ‘Homes for Older Londoners’ highlighted that demand for specialist retirement housing in London will more than double over the next 30 years. What is the coalition government planning to do about this? They are not listening to lobby groups nor the Housing industry. The Chancellor has missed yet another opportunity to address any of these issues ."

Simon Rubinsohn, Chief Economist for the Royal Institution of Chartered Surveyors said: “The lack of housing supply is crippling the property market. If Help to Buy is to remain, Right to Buy extended, and expensive social housing sold off then the Government’s commitment to building houses simply must be extended. The £1bn of loans to unblock housing development across the country will contribute towards housing need and will drive construction jobs. However, we still believe housing is not at the centre of a coordinated property-led growth that supports a balanced regional recovery where all can access the market. The increase in the HRA borrowing cap will only make a very minor dent in the housing deficit.

“It was also disappointing to see long overdue changes to stamp duty have been ignored, particularly as the amount of revenue generated from this is rising sharply. The government plans to collect more than £60bn over the next five years in stamp duty receipts from British householders. Moving away from stamp duty brackets to a marginal system would be a boost to those struggling with the cost of living and help boost the number of property transactions. This will remove the so-called ‘dead zone’ created by the previous structure which saw a dearth of properties on the market between £250,000 and £270,000.

“Business rates are currently imposing a very heavy burden on SMEs and today’s measures provide real support for business growth. The reoccupation relief will go a long way to regenerate the high street.”

BNP Paribas Real Estate’s Head of Business Rates, Jim Ruthven, said: “The Government’s intervention in reducing the business rates burden by capping the inflationary increase in 2014/15 bills at 2 per cent is welcome news. The proposed discount of £1,000 in rates payable on retail properties with rateable values below £50,000 is again welcome. But how will council’s determine what is a retail property and how was the £50,000 threshold decided upon? Unfortunately, many of the shop units on the UK’s high streets will not qualify.”

Associate Partner George Pickard of Halls Estate Agents in Worcester, said: “We are at long last on the cusp of a housing market recovery after a very difficult recession. However, it is being held back by the archaic and unfair stamp duty system, which is hitting first time buyers, hard working families and house buyers at all levels. Stamp duty has been a bone of contention for many years and is becoming a major obstacle for the housing market recovery. One way of making the current system fairer could be the introduction of a new threshold from £250,000 to £375,000 at 2 per cent."

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