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UK budget brings mixed reactions from property sector

Rishi Sunak.

There were mixed reactions to the UK’s Spring budget from the property sector yesterday as Chancellor of the Exchequer Rishi Sunak began to address the country’s mounting debt and teetering economy in the wake of the covid health crisis and Brexit.

Neil Sinclair, chief executive of listed regional property specialists Palace Capital, said: “The decision to relocate The Treasury to Darlington and set up the National Infrastructure Bank in Leeds is brilliant news.”

“Our great northern towns and cities have enormous potential,” he added. “This move, which is a strong signal of the Government’s commitment to rebalancing Britain, ensures that the regions will be at the heart of the nation’s economic recovery efforts post Covid-19.”

Not everyone was as impressed. According to Colliers, the Chancellor has “done the bare minimum” and has not provided the across the board support needed by UK businesses.  

“The Chancellor has missed a golden opportunity to reassure businesses and clarify his business rates strategy in the Budget today,” said John Webber, head of business rates at Colliers International.

Webber explained that the Chancellor had followed through on expectations that he will extend the current 100%, 2020/2021 business rates holiday for the retail, hospitality and leisure sectors for an extra three months to the end of June and then provide an up to two thirds business rates holiday for the following nine months.

Little for those that did not have business rates holiday

However, Webber said that this has done little to help businesses in other sectors which have not had the advantages of the business rates holiday and have also seen genuine hardship.

Webber said these sectors include the aviation industry, manufacturers especially those supplying retail, hospitality and leisure and many office-based businesses.

He said that in the office sector the financial implications of the pandemic have been dramatic, as demonstrated by the number of companies appealing their rates bills under the “material change of circumstance” argument. Colliers estimate this number is now around 350,000.

Webber added that the Chancellor has “failed to do anything” about these business rates appeals  nor has he tackled the business rates multiplier’s “outrageous” level of £0.51.

“Even the rates holiday for retail, leisure and hospitality is not as simple as it sounds. After the first three months it looks like it is going to be really cumbersome for businesses to apply, and up to the already over stretched billing authorities to sort out.”

Audley Group CEO Nick Sanderson, said that the stamp duty “holiday” introduced on the sale of homes and which was implemented to get the market moving, “wouldn’t easily withstand the shock of an immediate cancellation which the Chancellor has rightly recognised.”

Targeting the wrong end of the market

However he added that the measure succeeded in some parts of the housing market but not all. “This Budget focuses on targeted measures at the wrong end of the market – 95% mortgages will primarily benefit first time buyers, but there is no support for those downsizing or moving into housing with care.”

Sanderson also said that the lack of fiscal support for social care in the Budget was likely to receive wide criticism, “given the significant pressure that the pandemic has put on an already underfunded system.”

He said that while short-term support might have been welcome for those that have “worked so hard over the last year, it isn’t the Chancellor and his Budget that can make the systemic change needed to reform the system from the ground up.”

He added that the only feasible solution is reducing the need for care within the UK which involves a more holistic view of social care for older people.

Meanwhile, Clive Docwra, managing director of property and construction consultancy McBains, said that while the Chancellor’s hands were tied by the extent of the COVID crisis, “unless there is anything in the small print of the Red Book – there was little specific announced for the construction sector given that the government has made ‘build back better’ its mantra for recovery.”

95% mortgages could trigger housebuilding revival

“The ‘super deduction’ in tax may encourage construction firms to invest, while the reintroduction of 95% mortgages, and extending their availability beyond first time buyers, could trigger a revival of the housebuilding sector.

“But we’re disappointed that it appears green retrofit schemes, such as the Green Homes Grant, were not renewed, as such programmes not only help contribute to carbon net-zero targets, but provide a lifeline to many construction firms in terms of maintenance contracts.  On a macro-level, we’d have also liked to have seen a bigger commitment to wider green initiatives to help encourage the industry to move towards net-zero.”

And he added: “While the Chancellor may have introduced a fast-track visa scheme for high-skilled workers in the tech sector, we’d have welcomed similar applying to the construction industry, because a combination of Brexit and Covid has led to an exodus of high-skilled construction workers from the EU and elsewhere.”