Mixed response to Budget
The property industry’s cautious response to this week’s Budget can be summed up in the comment by Liz Peace, chief executive of the British Property Federation, who said the statement contained “more good than bad” for the industry overall.
Mark Collins, chairman of CBRE residential, welcomed the STG 3.5bn funding for the Government’s Help to Buy scheme, which he said would enable people to get on the property ladder and provide a much-needed boost for the housebuilding industry; he also noted that measures to stimulate housebuilding would act as a catalyst for the wider economy. DTZ’s head of UK and Ireland, Colin Wilson, said the Chancellor had also recognised the need for new development models through the guaranteed mortgages scheme, but cautioned: “The reality is that it is going to be a long hard climb back to pre-downturn levels of housing completions”.
Lucian Cook, director of Savills research, said the Help to Buy initiatives would have a “much bigger impact” on market functionality and transaction levels than previous government schemes such as FirstBuy and NewBuy. “We also expect the schemes announced to give a bigger boost to house building, although we still forecast levels of construction well below the 230,000 new homes needed a year.” Knight Frank warned that Help To Buy was unlikely to be enough in insolation: “The planning system needs to be streamlined further, and there needs to be more support from the public sector to release development land,” the firm said.
Dr Neil Blake, head of UK and EMEA research at CBRE, said “not nearly enough” measures had been taken to get institutional investment into infrastructure and ensure the delivery of more residential stock. “What the economy needs is a new way of getting funds into residential development, not just ownership,” he added, highlighting that while multi-family housing was leading the recovery in the US, it was “practically non-existent” in the UK.
Turning to measures affecting the retail industry, Liz Peace noted that the government is to consult on allowing the change of use from retail to residential without the need for planning permission; she said this “could be an important step in breathing life into our high streets”. “We would very much encourage a flexible approach, particularly in areas with increasingly obsolescent retail stock that is unlikely to be brought back into retail use,” she added. CBRE’s head of retail consultancy, Jonathan De Mello, said the government could have done more to incentivise developers to kick-start stalled schemes, “which would have provided much needed jobs and retail-led vitality in town centres that have not seen investment for some time”.
De Mello added that, given that the government isn’t going to change its decision on deferring revaluation for business rates until 2017, “one measure that would definitely help in the short to medium term would be not to increase business rates in line with inflation until the 2017 revaluation. This would not fully stem the rise of administrations we have seen, but would certainly slow it down.”
British Retail Consortium director general Helen Dickinson said the Chancellor “could have done more to help retail businesses to help him deliver jobs and growth”. “Moves on the income tax threshold and fuel duty are great for consumers’ confidence and ability to spend, which will help retailers and the wider economy. But, pressing on with a third-successive substantial business rates rise is very disappointing. Freezing rates would have made a real difference to our troubled high streets and the communities that rely on them,” she added. “It’s now even more important that the Government delivers quickly on its existing commitment to reassess the formula for determining future years’ rates increases.”
