Twelve months ago the property industry got the Budget it wanted. I doubt it will be so fortunate this time around.
Out of his red box last March, George Osborne pulled REIT reform, help for first-time buyers, the return of enterprise zones and the promise of a developer-friendly planning system. And yes, not all have lived up to their promise – disappointing EZ incentives, a momentum-sapping row with the National Trust over planning, and so on. But at least the spirit of reform was there, if not the body.
This time, the chancellor finds himself backed into a corner. On Wednesday, Fitch joined Moody’s in putting the UK on negative outlook. Seven days away from the Budget it was a PR masterstroke for a savvy (and opportunistic) ratings agency. It may not be especially revelatory, but it does severely restrict Osborne’s room for manoeuvre.
Any steps he does take that affect property are likely to be tightening, rather than loosening. Stamp duty land tax is in the Treasury’s sights and we could see some form of charge levied on the transfer of land-rich companies holding UK residential property. Any reform of residential property taxes has generally been resisted by successive governments as it makes for bad politics. But Osborne could be persuaded to look at the top two council tax bands.
And he may choose to go further with the REIT reform he introduced last spring. The birth of US-style mortgage REITs is not out of the question. Neither are social housing REITs. The former could take on existing bank loans to free up lending in the UK at nil cost to the exchequer. The latter could create investment vehicles, and further reduce the need for government subsidy.
But there will be little movement in the matter that tops most wish-lists this time around (p46).
Despite compelling new reasons why the empty rates regime should be reformed, don’t bet on Osborne giving an inch.
Unless of course the chancellor reads this week’s EG story (p39) on the public sector’s empty rates bill.
According to figures we have collated, the combined empty rates bill incurred by Whitehall and town halls up and down the country has topped £50m over the past 12 months, and is forecast to rise to £69m next year.
Now at this point we should be able to cast that as a percentage of the amount the government collects through empty rates charges. But we can’t. Because the government does not release that figure. Nor, worryingly, does it seem to have the faintest idea what the figure actually is.
One hundred councils told us they didn’t even know what their own empty rates bill was. How could they be expected to know what businesses in their area incur? It is, of course, a ridiculous state of affairs. And does little to strengthen the case for the status quo.
Unfortunately, for this Budget at least, the status quo is the most likely scenario.
Savills results this week tell an interesting story of shifting global power. Buried beneath a headline rise underlying group profit before tax of 7% were two revealing figures. Underlying losses in Savills European transaction business more than doubled to £8.8m. Profits in mainland China, meanwhile, increased by 43% to £7.3m. Those air miles racked up by the firm’s globe-trotting chief executive, Jeremy Helsby, are clearly paying off.
We’re stepping up our residential coverage from this week, with a monthly spread combining news, analysis, interviews and commentary. Of course, we’ll be covering the sector in other weeks, too – and daily online – but we’re sure readers will welcome the additional coverage. Comments are always welcome, to myself (damian.wild@estatesgazette.com), or our residential correspondent Annabel Dixon (annabel.dixon@estatesgazette.com).
