Dr. Neil Blake, Head of EMEA Research at CBRE, comments on the implications the Budget will have on real estate:
“Lower growth forecasts, due to lower productivity may look like gloomy news for retailers if it translates into lower wage growth and weaker consumer spending, but continued optimism around employment growth is good news for future demand for office space.
“On the other hand retailers, and small businesses in general, will be pleased with the more generous exemptions on business rates, even if they didn’t get some of the more radical measures they were asking for. Changing from RPI to CPI indexation from 2020 will take the sting out of the future tax burden as RPI is expected to grow by 1% ahead of CPI. The move to a 3-year valuation cycle will also be welcome.
“The time when London will have full control of business rates has been brought forward to April 2017, this is a significant measure as it allows London to keep the fiscal benefits of economic growth and property development, which encourages growth friendly policies at the local level. We may well see this become the blueprint for similar plans extended to other parts of the UK.
“There are new mayoral devolution deals for a number of areas (though not yet for Leeds, Southampton and Portsmouth which have yet to agree to elected mayors), and there are new deals for the Shire areas that have agreed to have mayors. City deals plans for Edinburgh will also put it in on level pegging with Glasgow and Aberdeen.
“Commercial property stamp duty changes coming in at midnight will come as some relief to smaller property owners, but is effectively tax grab for the Chancellor, to the tune of £500m; a significant 15% increase in the tax take”.
“New rules to tighten up tax rules for offshore property investors and developers will have some impact on returns from overseas interests, but if the Chancellor is right about the UK being the fastest growing major economy over the next five years, the UK will continue to be an attractive investment prospect.”