As George Osborne prepares to deliver his 2013 Budget next week, Birmingham property consultants Bruton Knowles are calling for the Chancellor to do more to support the property and construction industry.
The firm said scrapping the empty property rates tax and reversing the decision to postpone the business rates revaluation would be two of the most welcomed announcements Mr Osborne could make when he delivers the Spring Budget on the 20th March.
The firm also wants to see further measures to stimulate development through increased public sector funding, planning assistance and stimuli to increase lending to developers.
Rupert Detheridge, associate in the development team at Bruton Knowles’ Birmingham office, said empty property rates is one of the biggest barriers to development, constraining supply of new commercial property.
“The biggest help that George Osborne could give to the commercial property sector in the Budget is to scrap the tax on empty commercial properties,” he said.
“The property industry has been lobbying the Government to scrap the tax since it was first introduced in 2008 and it is time that it listened and took action. In his Autumn statement, the Chancellor acknowledged the pleas by announcing that relief would be granted on new buildings for up to 18 months after completion. While this is welcome, frankly it doesn’t go far enough.
“One thing Mr Osborne could do is extend the 18 month rate free period to include refurbished commercial property.”
Mr Detheridge also called for the Chancellor to provide more support for the residential sector.
“Initiatives such as NewBuy and FirstBuy to help get first-time buyers back into the market have had some success but need more time to bed down to have a real impact. Extending these schemes could provide the stimulus that is needed to kick-start the market. Extending the Funding for Lending scheme to support smaller and medium sized housebuilders who cannot get finance would also be welcomed.
“However, any support that is granted by central Government to help the housing sector has to be backed up at a local level. Housebuilders can only build if the land is available to do so and local authorities grant the necessary planning permissions, which remains one of the biggest challenges facing housebuilders at the moment.
“On a wider level the focus has to be on regeneration schemes, transport and infrastructure. However, the question is who is going to deliver this in the absence of Regional Development Agencies? Local Enterprise Partnerships are very embryonic and do not have a delivery function. The Government’s focus on Enterprise Zones is encouraging and the appointment of Tory grandee Lord Heseltine to spearhead the initiative demonstrates that the Government is serious about making them work.”
For the retail sector, Bruton Knowles said one of the biggest announcements Mr Osborne could make in his Spring Budget is scrapping the proposed postponement of the 2015 business rates revaluation.
As part of the Growth & Infrastructure Bill, which is currently going through Parliament, the Government is planning to postpone the 2015 rating revaluation to 2017, meaning rates will continue to be calculated based on valuations set in 2008, when the property market was considered to be at its peak.
Adam Rock, associate in the rating team at Bruton Knowles in Birmingham, said: “Ratepayers and rating advisers were holding out for the 2015 revaluation as reductions in rateable values were hoped and expected reflecting the downturn in the market. The retail sector is facing unprecedented challenges and this postponement will only mean that ratepayers are potentially paying more for longer.
“The Government said the move would provide tax stability to shops and businesses. However, all it has managed to do is trigger a backlash from ratepayers, rating advisers, retailers and property groups alike.
“The British Property Federation (BPF) labeled it a ‘shot in the foot’ for the ailing retail sector, which is in its worst state for 20 years.
“Communities and Local Government Minister Brandon Lewis, who announced the plans last year, suggested the decision to hold onto the 2008 market values would have little affect as rates are linked to inflation and this would mean no real term increase until 2017.
“While it is true that inflation rates are low, this delay is generally bad news for ratepayers and is considered to be yet another money making scheme for the Government and evidence that property taxation in general requires a major overhaul.
“It would be a big surprise if the Government did a U-turn on the business rates revaluation. The recent announcement that the postponement will also be introduced in Wales suggests that it’s highly unlikely.”