Leading property experts from property consultancy Knight Frank have responded to the Chancellor’s 2020 Budget announcement:
Darren Mansfield, Partner, Commercial Research at Knight Frank:
“A government commitment to long term investment in the UK regional cities is not only welcome, but necessary to sustain growth moving forward. In recent years, regeneration and reinvention initiatives have positively impacted local economies delivering new business, living and job creation hotspots. This newly created buzz has led to an influx of domestic and international businesses who have established, not only an operational footprint, but new career options for local residents. Today’s announcement of increased spending on infrastructure both physical and digital can only serve to enhance the place creation successes already achieved and in turn solidify the case for continued investment into the UK cities.”
Keith Cooney, National Head of Business Rates Service Line at Knight Frank: Chancellor Ignores Business Rates Burden for Large Businesses during Coronavirus Outbreak.
“The new Chancellor chose to ignore large businesses in his budget today, offering them no business rates relief from this £ 29 billion tax burden. This is despite the fact that he recognises the impact on business and has provided support by exempting all retailers, and businesses in the leisure and tourist sectors provided their assessments are less than rateable value £ 51,000.
“Although the announcement of yet another business rates review is welcome this is no comfort for the large businesses who have been ignored despite employing thousands and are equally vulnerable to the current outbreak.”
Tom Bill, Head of London Residential Research at Knight Frank, said:
“The introduction of a surcharge for overseas buyers will bring the UK into line with many other global property markets. Attempts to ease affordability pressures in the wider housing market should be welcomed, although the new measure will need to be monitored carefully to ensure there are no unintended consequences, including for the forward-funding of new-build developments. Furthermore, a wider re-think of stamp duty rates is still needed to increase housing market liquidity and maximise any stimulus the government plans to provide to the UK economy.”
David Goatman, Partner, Head of Energy and Sustainability EMEA at Knight Frank:
“The Chancellor has today announced a new £500m investment in rapid EV chargers, so that drivers should be no further than 30 minutes away from a charger. This new investment is welcome. However, the bigger question is whether we have the grid infrastructure to accommodate the EV revolution we need?
“The challenge ahead for the grid as our vehicles move from fossil fuel to electrification is huge and affects not only cars, but the vans, trucks, and fleets that serve our e-commerce economy. £500m is the tip of the iceberg.”
William Matthews, Head of Commercial Research at Knight Frank:
“Today’s flurry of announcements encompasses both immediate and longer term support for households, businesses, the wider economy – and by implication, the commercial property sector.
“The Bank of England’s 50bps rate cut means that the base rate is now back to its lowest ever level. Sterling has remained relatively unchanged, but UK property pricing remains very attractive in the eyes of overseas investors. Meanwhile, UK gilt yields remain close to rock bottom levels, strengthening the appeal of property’s comparatively high yields.
“But the other measures announced by the Bank of England are also noteworthy. By introducing a new Term Funding scheme, more money is to be made available for small and medium sized businesses, in an effort to counter the temporary impact of Covid-19. The Bank has also freed up additional capital for businesses by reducing its capital buffer requirements. All other things equal, we expect these will be supportive of rental income stability.
“The Bank of England’s announcements come at a time when other central banks around the world are undertaking similar easing measures. The result of this is likely to be a continuation of downward pressure on yields of all asset classes.
“The Budget announcements are longer-term in nature, and taken together, represent a significant increase in government spending. The benefits of well-targeted infrastructure spending are straightforward to comprehend, especially if they help boost economic productivity. What’s more, the clear emphasis on the UK beyond London and the South East will offer a boost to the UK’s major regional cities. More specifically, we would highlight the focus on innovation and technology infrastructure, as one facet of the Budget likely to be particularly beneficial to both the occupational and investment aspects of the UK’s commercial property markets, if delivered.”