What has today’s ‘Budget for Growth’ done to support the property industry?

Michael Cook , Group Managing Director of Leaders Romans Group on the private rented sector, first time buyers and downsizers:

For a Budget intended to reverse the economic slowdown and cost of living – in the Chancellor’s words, ‘a budget for growth, long-term sustainable growth’, this only scratched the surface, providing little help for those unable to afford to rent or buy.

The property industry had hoped for so much more.

To prevent rent escalation and homelessness, we had hoped that the supply/demand imbalance in the private rented sector would be addressed. We need an efficient and fair way of attracting good quality landlords back into the sector, to support tenants struggling to find suitable affordable accommodation.

Since the government ended the Help to Buy scheme it has become even more difficult for first time buyers to get on the housing ladder. Thousands throughout the country could progress onto the property ladder if a suitable alternative was put in place, but needs to be done quickly. Experts withing LRG’s Shared Ownership division propose a deposit match scheme, enabling those would-be homeowners who don’t have accessible funds in the ‘bank of mum and dad’ to put down the necessary deposit.

We had also hoped to see a reduction in stamp duty to encouraging downsizing, and in doing so free up more family homes for those who desperately need them.

Andy Jones , Director of Corporate and BTR, Leaders Romans Group on property development and investment:

Many developers feel that potential is limited by prohibitive debt financing, out of control materials costs, high stamp duty, excessive Capital Gains Tax for international buyers, increased mortgage rates and an absence of mortgage interest tax relief is putting off the retention and flow of BTL landlords, in the sector.

To compete for the international finance that is needed to fund large scale projects the Budget could have waived the 2% surcharge payable by overseas investors, it could have introduced tax relief to counter excessive cost rises, reduced stamp duty and reintroduced mortgage interest tax relief.

Furthermore, there is a strong likelihood that the looming EPC changes – specifically the proposed upgrade to C rating for all new lets by 2025 – will have to 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.

The UK should be one of the best places in which to invest, due to the language, time zone, and talent pool but the Budget does little to support this.

Lawrence Turner , Director of Boyer on initiatives to address the problem of nutrient neutrality which has stalled housing delivery:

The Chancellor opened his budget by saying that it was one of ‘removing obstacles’. But unfortunately it will do little to resolve the most significant issue to affect housing development up and down the country – that of nutrient neutrality.

Two months ago I was invited to No.10 to discuss nutrient neutrality and unlocking housing delivery, for what seemed to be a very constructive meeting.

Since then much of the debate has focussed on what water companies can do to solve the issue at the source, with the Government introducing a new legal duty on water companies (via the Levelling Up and Regeneration Bill) to upgrade their wastewater treatment works by 2030. The problem is that this is not a quick fix and does not unblock housing development today.

There has also been discussion on how local planning authorities (LPAs) have taken an extremely cautious interpretation of the Habitat Regulations – which prevent planning permission being issued for new residential development unless the Applicant can solve a nutrient problem that they aren’t responsible for and that costs a huge amount of money for a developer to mitigate. Money that will usually be directed away from building much needed affordable homes on development sites.

Then there has been debate on whether LPAs can provide this mitigation themselves through credit schemes – where an LPA enters the market, buys some land (in the right place and from a willing seller) to provide a wetland or woodland and then sells the resulting nutrient credits to developers. On paper this works. In practice it does not. It doesn’t work because LPAs can’t buy enough land in the right places; and where they can, the mitigation schemes deliver too few credits. It also takes a long time to establish the mitigation – and a long wait for developers. It leaves LPAs with the quandary of who should get the limited number of credits available – allocated land, SMEs, brownfield development etc.

Today’s budget announcement looks to provide cash to LPAs to supersize their credit schemes. Unfortunately, this won’t fix the problem now. All the problems that exist with LPA credit schemes, such as buying sufficient land, coordinating with NE and stakeholders, having sufficient officer resources and expertise, and expeditiously delivering sufficient credits to the market are simply too great for LPAs to solve.??

The only way for the Government to unlock the 120,000 homes that are stuck in the planning system is to either:

·????????Ditch the nutrient neutrality rules, as the previous PM had pledged; or

·????????Provide sensible and proportionate guidance to LPAs on the interpretation of Habitat Regulations. That residential applications for Reserved Matters and Planning Condition Discharges should not be subject to re-assessment where a Habitat Regulations Assessment (HRA) has already been undertaken at outline planning stage. This would unlock immediately a significant number of homes from the planning system to help young people get on the housing ladder and deal with the housing crisis that is engulfing the UK.

Stuart Hicks , Head of Rating at Dunlop Heywood on business rates:

?In 2023/24 business rates will contribute ￡30bn to public sector receipts but the 2023 budget was relatively quiet on this subject. The major win for ratepayers had already been announced several weeks ago, with the announcement that downward phasing of reductions in liability from 1 April 2023 was to be scrapped. This means that many ratepayers in sectors such as retail, hospitality and aviation will see the immediate benefit of reductions in rateable value following the 2023 revaluation. Announcements today include:

Business rates avoidance & evasion consultation – recognising concerns raised by stakeholders during the Business Rates Review, the government said that it will ensure that revenue is protected by consulting on measures to combat business rates avoidance and evasion.

Business rates retention – the government said that it intends to expand the local retention of business rates to more areas in the next Parliament and will work closely with interested councils to achieve this.

Investment Zones - will have access to a single 5 year tax offer matching that in Freeports, consisting of enhanced rates of Capital Allowance, Structures and Buildings Allowance, and relief from Stamp Duty Land Tax, Business Rates and Employer National Insurance Contributions.

Business rates review - the Government said that it is publishing a summary of responses to the Business Rates Review technical consultation, which closed in February 2022 and that it will set out further detail on how reform will be delivered in response to stakeholder feedback.

Transparency and disclosure - the government said that it is publishing a consultation on the Valuation Office Agency’s “Business Rates: Transparency and Disclosure” consultation publication providing ratepayers with more information on rating valuations. The consultation will seek to gather further views and understand any concerns on how this might work in practice for ratepayers, while balancing the need to protect data and confidentiality.

Digitalising business rates - the government is publishing the summary of responses to its consultation and impact assessment on the design of the “Digitalising Business Rates” (DBR) programme. This document will outline the government’s response to the feedback received which includes a reduction in scope, new legislation to deliver DBR, and an integrated system for ratepayers to interact with central government.