Budget 2023 - hopes and expectations from LRG

Experts within Leaders Romans Group have given some thought to hopes and expectations for Wednesday’s Budget.

Read on for our view on a wide range of topics - infrastructure, energy efficiency charges, reliving the tax burden for overseas investors and supporting both first time buyers and the private rented sector.?

Retaining London’s position as a No.1 global city can’t be achieved without fiscal change - Andy Jones Director of Corporate and BTR, LRG:

It’s rare to hear panel speakers swearing at a London property?conference, but last week’s London Residential Investment?conference was somewhat fruity! There was frustration in the room that clearly highlighted an willingness by investors and developers to get on and build, but as things stand this was just not viable. The preverbal can is definitely being kicked down the road!

It was inevitable that the central question – ‘Is London still considered the No.1 global city?’ created some consternation. Essentially it was felt that the GLA’s ambitious growth plans wouldn’t be met without substantial fiscal change.

Attendees came from all corners of the development industry, and were generally in agreement that substantial change is needed to get developers building at scale and their schemes hitting some sort of sensible viability and respectable margin.

Balance sheets were shared which showed a c32% increase in total costs – more than obliterating projected?margins, and development schemes being cancelled or remodelled as a result.

The consensus was that debt financing costs are prohibitive, costs are out of control, stamp duty is too high, Capital Gains Tax for international buyers is excessive, and increased mortgage rates and an absence of mortgage interest tax relief is putting off the retention and flow of BTL landlords, in the sector.

The reversal of decisions such delaying HS2 - increased spending on national infrastructure - Ananya Banerjee , Director, Head of Design, Boyer:

The Government is falling woefully behind on spending on national infrastructure. There is a lot to do, and a lot of wheels that need to be got moving.

This was discussed yesterday on the Laura Kuenssberg show. ?Simon Clarke [Secretary of State for Levelling Up, Housing and Communities between 6 September 2022 and 25 October 2022] said that whilst he wasn’t in favour of unfounded borrowing, there was consensus on the importance of borrowing to fund national infrastructure projects to re-ignite the economy.

The Chancellor has made numerous commitments to economic developments, most recently for tech investment in the Midlands, but all that is incomplete without national infrastructure improvements throughout the country. And inevitably infrastructure investment will have a positive impact on housebuilding.

Encourage international investment in the UK through the tax system - Andy Jones Director of Corporate and BTR, LRG:

To complete for the international finance that is needed to fund large scale projects such as Battersea Power Station, the Government should consider waiving the 2% surcharge payable by overseas investors.

London should be one of the best places in which to invest, due to the language, time zone, and talent pool. But there is a strong feeling that its appeal is weakened and risks a sharp decline.

A replacement for Help to Buy to assist first time buyers in getting on the property ladder - Tim Foreman , New Homes Director, LRG:

Since the government ended the Help to Buy scheme it has become increasingly difficult for First time buyers to get on the housing ladder with them sometimes having to find huge sums of money to use as their deposit. – I would like to see more help with the housing market, particularly towards first time buyers, enabling them to make this first step.

Support first time buyers though a Government-funded doubling of their deposit - Adrian Plant , Shared Ownership Director, LRG:

The Government could consider schemes for first time buyers – such as a deposit match scheme by which, if purchasers can demonstrate that they have saved over a period (maybe up to ￡5-10,000) their deposit would be matched by the Government. This will then encourage young people to save in the knowledge that their deposit will be meaningful.

Reduce stamp duty to enable downsizing & make family homes available for families: Kevin Shaw , Managing Director National Sales, LRG:

We must address the punitive level of stamp duty – particularly stamp duty over ￡500k which is holding back mobility in the housing market and affecting “downsizers”.

Fair treatment of private landlords to end the rental property shortages - Peter Kavanagh , CEO, LRG:

The Government must review its unfair treatment of private landlords, to encourage more to remain in and invest in the private rental sector, to increase supply of available property for tenants.

Fiscal incentives to support landlords – to prevent the demise of the PRS and an escalation of homelessness: Michael Cook , Group Managing Director, LRG:

I would like to see something that addresses the supply/demand imbalance in the PRS. Section 24 rules have had the knock-on impact of inflating rents. We need an efficient and fair way of attracting good quality landlords back into the sector to support tenants struggling to find suitable accommodation at appropriate rent levels.

An overhaul of the tax system to allow the property industry to lead the economic recovery that the country needs – starting with a decision to delay the EPC timetable - Andy Jones Director of Corporate and BTR, LRG:

Substantial changes should include introducing tax relief to counter excessive cost rises, reducing stamp duty and reintroducing mortgage interest tax relief.

Furthermore, the looming EPC changes – specifically the proposed upgrade to C rating for all new lets by 2025 – will almost certainly be kicked down the road too. But this must be confirmed before we get to the edge of the precipice to avoid scaring off the private landlords that we desperately need to maintain a competitive private rented sector.?