Ahead of the Chancellor’s Autumn Statement on this week, CBRE outlines the measures it would like to see included for the property industry.
James Brounger, Regional Managing Director CBRE South Central, said: On business rates reform – “Some businesses could be paying more in rates than in rent.”
“Business rate reform is still a priority, particularly for retailers. The 5.6 per cent rise in the rate bill next year due to inflation-linking could create additional pressure for a sector facing a marked slowdown. In view of the exceptional rate bill increase in 2012 resulting from inflation, businesses should be allowed some measure of deferment.
“With rents flat or falling, rate liabilities will rise as a proportion of total occupancy costs leaving rate bills out-of-line with market conditions until the next revaluation in 2015. Some businesses could be paying more in rates than in rent in this period. The solution is more frequent revaluation and swifter implementation of new rating lists.”
On stamp duty reform – “The regime should be reformed.”
“Stamp Duty is currently payable on the total price of a house at the rate applicable above a given threshold. This creates highly distorting step jumps in the duty payable above each of these thresholds. A first-time buyer, for example, would currently pay no Stamp Duty on a purchase of £245,000, but £7,650 (3 per cent) if the price was £255,000. The regime should be reformed to smooth out these distorting jumps, so the amount payable rises progressively with price.”
On Real Estate Investment Trust (REIT) reform – “The balance of business test should be modified for residential REITs.”
“The Government should amend the rules on REITs to improve the prospects for the creation of residential REITs. Residential investment portfolios typically comprise a proportion of “trading stock” which creates problems in meeting the requirement for 75 per cent of REIT assets to be “investment property”. Further complications can arise from the inclusion of homes held on a shared ownership basis or other forms of intermediate tenure, given the increasing share of these tenure types in the residential market.
“The balance of business test should be modified for residential REITs, so that a residential investment company could qualify if at least 75 per cent of the homes held in its portfolio during any year are let, available to let or subject to shared ownership arrangements.”
