Sunday Trading Reform: overdue but not a game changer
The worst kept secret is now out. As widely predicted, the Chancellor has confirmed in his Budget that Sunday trading laws are to be relaxed. Rather than go the whole full nine yards and lift all restrictions centrally, decision-making will be devolved to local authorities and mayors.
What does the potential relaxation of the laws mean in practice? It would mean that current restrictions, whereby shops over 3,000 sq ft can only trade for a maximum of six hours on a Sunday, are lifted, bringing the Sabbath in line with the other six days of the week.
Is this a massive game changer? Not really – certainly not on the scale of the last reforms that were put in place 20 years ago under the then-controversial Sunday Trading Act. Inconceivable as it may seem now, particularly to the Millennial Generation, 20 years ago barely any shops at all were able to trade on a Sunday. High streets, shopping centres and retail parks were oases of calm on Sunday – or, depressing, no-go lands depending on your point of view. The Sunday Trading Act changed all that, albeit with some concessions.
Will retailers embrace it? Yes – most of the leading multiples will see this as an opportunity to open their stores for longer. Trade publication Retail Week has canvassed opinion from a number of leading senior retailing figures, including M&S, Waitrose, Next, Morrison’s and Asda, and all confirmed that they would take advantage of any relaxation. At the same time, none were particularly gushing as to what a great opportunity this would represent. Their relative indifference speaks volumes.
Will relaxing the laws further provide a major fillip to overall retail sales? Will there be substantial economic benefits? Probably not. There is limited empirical evidence to suggest that liberalising store hours drives incremental growth to retail sales. The same level of spend is merely dissipated over a wider/longer trading period. But this misses the point. Extending Sunday opening hours gives consumers what they crave and value most – convenience and greater choice. ‘Browsing periods’ on a Sunday morning, when customers can walk stores but not buy anything, are farcical in this day and age, as is the last minute dash to catch a store that closes its doors abruptly at 4.00 pm. You can shop online at any time on a Sunday, why not too in store?
Who stands to lose out? Obviously, religious groups will oppose the change, but even accepting their sensitivities, surely the horse has already bolted? It may, however, be a blow to the large portions of the independent sector, who are currently immune to trading restrictions on a Sunday. In effect, by levelling the playing field, they will see one of their competitive advantages wiped out.
As ever in retail, the consumer is the final arbiter. Trade restrictions on a Sunday are hardly conducive to today’s ‘anytime, anywhere’ consumer and in this regard, their relaxation is long overdue.
Stephen Springham, Head of Knight Frank Retail Research
“On their own, the changes to the non-dom tax rules will not have a profound impact on the prime London market as demand is driven by a number of factors, and non-doms form only a part of demand.
“These reforms follow a series of changes in recent years that make it increasingly difficult to argue prime residential property is under-taxed. The relatively subdued nature of the prime London market since December’s stamp duty changes highlights the risk of higher taxation on market demand and also government revenues.”
Liam Bailey, Global Head of Research at Knight Frank
“Property trends over the last few decades have led to an amassing of housing wealth among older people. Increasing the Inheritance Tax (IHT) allowance will mean that more of this wealth flows back down the generations rather than into the Treasury coffers. It will give more people the chance to amass a deposit for a new home or make a step up the housing ladder.
“Making an allowance to protect downsizers is welcome. It means those living in large houses do not have to continue to do so in order to benefit from the IHT changes. This, in time, could help release more large homes back into the market.
“However, the tapering of the IHT bands upwards over the coming years mean that some may be tempted to sit tight in their home until they can downsize and retain the maximum housing IHT allowance, creating short-term stickiness in this market.
“The next step for policymakers will be to focus on is delivering housing suitable for downsizers – properties in the right location and with the right specifications for older residents.”
“This is a significant change in tax status for those with a rental portfolio, although the measured rate of introduction between 2017 and 2020 will help landlords plan their approach.
“Those planning to purchase a buy-to-let property will have to factor these new rules into their calculations, and this could affect the offers they are willing to make.
“If the relatively low yield environment seen today, especially in the South of England, is still evident when these changes start to come into force, there could be upward pressure on rents.
“The need for rental accommodation is strong, and we expect this trend to continue, especially in city centre markets around the UK.”
Gráinne Gilmore, Head of UK Residential Research at Knight Frank