Philip Glenn, Head of DTZ’s Nottingham office, said: “The Chancellor’s budget contained some reassuring messages which overall can be viewed as mildly positive for business growth. Short term impacts look unlikely but the medium term outlook for occupier demand thereby providing the foundation for rental/capital improvements in the relevant sectors, is encouraging. Further reductions in corporation tax, cuts to the top level of income tax as well as discussions around the long-term use of the bond markets are positive signs which will underpin confidence in the UK as a stable place to do business.
“It would appear that the proposed changes to the rate of SDLT are limited to residential property which will be a relief to the commercial sector particularly for those owners struggling to maintain values given low debt availability and generally weak occupier fundamentals. Our estimate is that the increase in SDLT to 7% for homes worth more than £2 million could raise around an additional £200-300 million in revenue for the treasury with the potential for more given the clear focus on anti-avoidance measures. However it is likely that this will affect a proportionally smaller amount of buyers in the East Midlands as house prices are generally much lower than in the South East. Concerns over the negative impact on traded volumes in this relatively small percentage of the market will probably be short lived once prices realign to reflect the additional cost. Given the massive inflation in this sector even during the economic downturn of the last 3-4 years it is possible that it may not even break stride.
“Confirmation of the New Planning Policy Framework (NPPF) is encouraging for development given its streamlining of the planning process. Questions still remain as to its impact given recent cuts in local authority planning resources, the NPPF’s ability to provide sufficient direction at either a national or local level, and the potentially obstructive impact of “Localism”. We also welcome extra finance being made available up-front to support construction companies building new homes but more still needs to be done to encourage the output required to meet future demand.”
