Regeneration but no rate reforms in Autumn Statement
The Chancellor's Autumn Statement was presented today, with key measures in place for planning, infrastructure and business rates.
Commenting on today's Autumn Statement, Simon Rubinsohn, RICS chief economist, said: 'As we've been saying for a long time, 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 some way to regenerate the high street at time when the latest RICS Commercial Survey shows an upturn in interest in retail space.'
'Housebuilding has had significant support this year in the form of mortgage guarantees and equity loans and this will be more welcome support for a truly vital sector,' said Marnix Elsenaar, head of planning at Addleshaw Goddard. 'But without a greater focus on driving new supply, the structural issues we face will only deepen.
'There remain two fundamental issues. First, the inconsistent and often nonsensical approach to planning, combined with an inefficient use of public land is restricting housing supply in many key areas. In places where it isn't immediately profitable to build, there simply have to be decisions taken where councils can partner with developers to contribute buildings or land through joint ventures agreements.
'Secondly, society needs to unveil itself from the stigma of renting and embrace it like the Americans and mainland Europeans do. We're already seeing the emergence of hotel-style rental blocks paid for by pension funds and this will doubtlessly form a major element of housing supply over the next decade.'
Rob Searle, commercial director at CareerStructure.com, said: 'The Chancellor's plans to invest in major projects like the Northern Line extension and 'Olympicopolis' development will be well received by industry professionals. The majority ranked increased investment in infrastructure and utilities as their top priority from this year's Autumn Statement. However, we wait to see if the Government will be as generous with concrete plans for investment in youth training to close the mounting skills gap, which was highlighted as an area of concern by 83% of industry professionals.'
Marnix Elsenaar, head of planning at Addleshaw Goddard, said: 'This is more welcome news for the economy but what's key is speed of delivery. The nature of the global bond markets mean there's a huge amount of money chasing 'gold plated' government infrastructure investments. With huge appetite for secure income generated by such projects, by creating efficient structures and effectively shouldering construction risk, it's possible to fund much of what we need privately, just as we have with airports and energy.
'The reality however, is that we still lag behind many other countries in air, rail and energy. And one of the key reasons for this is our cumbersome planning system which results in decade-long debates, highlighted by Terminal 5's 20 year gestation period.
'As the Olympics showed perfectly, legal instruments such as CPOs and the creation of district wide planning authorities can make things happen in a fair way that respects the wider interests of our democracy.'
Responding to today's business rates announcements and the Chancellor's pledge that business rates reform was 'on the agenda for the 2017 revaluation,' Liz Peace, chief executive of the British Property Federation, said: 'We are delighted that the Chancellor appears to have heeded our calls - and those other business groups - to commit to a review of business rates, as well as taking short-term action to mitigate the harm that continues to be caused by this archaic property tax. However, simply tinkering around the edges of the system will not be enough - the business rates regime remains one of the greatest barriers to investment in the built environment, and is fundamentally unfit for the 21st century.
'Action to support the re-use of empty shops is particularly welcome. Empty properties blight our high streets and town centres, and we would urge government to think further about reforms to the business rates regime that would allow property owners to invest further in these properties.'
Today's announcements commit Government to:
·support businesses to expand and create jobs by capping the Retail Prices Index increase in business rates to 2% in 2014-15 and extending the doubling of Small Business Rate Relief to April 2015;
·provide additional support to the retail sector through a business rates discount of up to £1,000 in 2014-15 and 2015-16 for retail properties (including pubs, cafes, restaurants and charity shops) with a rateable value of up to £50,000, and a 50% discount from business rates for new occupants of previously empty retail premises for 18 months.
'This is doubtlessly a welcome measure but make no mistake, this is a prime example of a chancellor playing to the gallery of trade bodies without fully addressing what is admittedly a costly issue to solve,' said Jane Hollinshead, partner at Addleshaw Goddard.
'Rates, like stamp duty taxes, are hugely unpopular but highly profitable. But as IPD data shows, the massive falls in the values of many shops mean current business rate levels are out of kilter with reality. People are paying way beyond what they should be because the rates were fixed at the height of a property boom.
'And where values in some areas fell by over 50pc, it's no wonder many smaller firms - unable to layer tax liabilities through off-shore corporate HQs - are pushed under.'