In response to The Chancellor’s Autumn Statement, representatives from a cross section of business lines at global real estate advisor, Colliers International, have provided their initial reactions and discuss how the announcements might impact the commercial property sector.
Walter Boettcher, Chief Economist, Colliers International, said:
“The Chancellor was right to identify ‘uncertainty’ in the GDP and public finance forecast numbers, hence the ‘last’ Autumn Statement, at first glance, looks to be a ‘caretaker’ budget given the lack of a clear economic path.
“Nevertheless, there are a few very welcome commitments and reconfirmations. The direct link made by the Chancellor between productivity and transport investment is crucial as it demonstrates continuity of the economic concept that sits behind the regional development agenda in general and the Northern Powerhouse in particular.”
“Announcement of a National Productivity Fund with a link to the National Infrastructure Commission suggests that regional development is firmly on the agenda. For commercial property, transport infrastructure is the physical framework for real estate. Given the short supply of quality assets UK-wide, any initiative that promotes development must be good.
“There is also a very specific regional hierarchy in this as the Chancellor remarked that further devolution of borrowing powers will be given to the new local combined authorities, but only those that are adopting the ‘mayoral model’, that is a single elected mayor. These can be listed and those that have not adopted the model are set to lose out.”
Business rates
John Webber, Head of Rating, Colliers International, said:
“It is a disgrace that the Chancellor has not taken this opportunity to accelerate business rates reductions in depressed parts of the country, which could desperately benefit from any reductions being brought forward.
“For London, a small softening in the scale of increase each year. But let’s be clear: a London firm that has doubled its rateable value will still be paying double business rates only 18 months from today. And taking into account inflation, this sop to the capital will offer little comfort.
“It is also clear that Government does not intend to work with the Mayor of London by providing a ‘Crossrail-levy-holiday’. This would provide much-needed breathing space taking off a further four per cent on top of rates bills for London firms with a rateable value of £55,000 or above.”
Housing
Ashley Osborne, Head of UK Residential at Colliers International:
“While there had been speculation of a relaxation of the stamp duty surcharge imposed on second home owners and buy-to-let investors, this has not materialised. We were not anticipating any significant alteration to stamp duty land tax as we believe that if the May government does change its view on the recent stamp duty amendments, it will keep its powder dry and make changes after Article 50 when the government will be looking for good news stories and policies to help stimulate the building industry.
“The commitment to provide £1.4 billion to deliver an additional 40,000 new homes in England in today’s Autumn Statement is a welcome announcement and likely to have a positive impact on the market, particularly for areas such as Milton Keynes and Bedford. However, the government has traditionally found it difficult to physically procure new build development, so we believe there are some real practical challenges to actually deliver this physical housing.
Lifting restrictions on housing types and grant funding for major and minor road improvements is good news for developers, however, the devil will be in the detail, and we await the white paper at the end of the year.
“The ban on upfront estate agent’s fees, currently imposed by lettings agents, is unlikely to have any significant impact on demand for buy-to-let property as ultimately, landlords will look to pass these increased costs on to tenants and this will put further pressure on rental levels.
“While we perhaps didn’t get the Christmas wish some had hoped for in the form of a reduction of stamp duty, overall, perhaps in times of such uncertainty, we should be thankful for some positive steps to take pressure off affordable homes and increase access to new land available for development.”
Anthony Aitken, Head of Planning at Colliers International said:
“The £2.3 billion housing infrastructure fund to help provide 100,000 new homes in high-demand areas creates a good soundbite, however with 300,000 houses required each year in the UK, and just over half that number being delivered, the scale of the housing crisis, predominantly lack of housing supply, becomes all too apparent. The fund will not start until 2021 and represents four months of the annual requirement. The biggest incentive that could help provide new homes in high demand areas, especially the south east of England, would be for government to require, indeed insist upon, local authorities to provide timeous local plans, where they have to meet their housing demand in full, having undertaken full green belt reviews. Not a snappy soundbite, but less obfuscation by local authorities in bringing forward local plans and addressing the actual issue, ‘head on’!”
Research and Innovation
Kaleigh Haeg, Head of Life Sciences at Colliers International said:
“The government commitment to research, development and innovation could not have come at a more pivotal time for the British science industry. Today’s commitment of £2 billion per year until 2020 reinforces Britain’s position in the global science community and allows us to continue with our world leading research. This investment is essential to companies who have been wavering since the outcome of the EU referendum as to whether to invest in Britain.”