How will Osborne’s 8th budget affect commercial property?
On 17th March 2016, Chancellor George Osborne delivered his 8th budget. The news looks good for taxpayers with increases in the higher tax band, a rise in the amount you can earn before paying income tax and a cut to corporation tax.
In terms of Osborne’s 8th budget affecting the commercial property industry, the reaction from property professionals and occupiers will have been very mixed:
Stamp duty changes
Osborne unveiled a shock increase on stamp duty for high value commercial properties which critics believe will slow growth within the industry and may even damage the government’s efforts to boost investment in the North through ‘Northern Powerhouse’ projects.
Osborne said the new rates will be 0% for the portion of the transaction value between £0 and £150,000; 2% between £150,001 and £250,000; and 5% above £250,000. This is a massive change from the system currently in place and is now more similar to how residential stamp duty is measured.
Euan Sutherland, a senior tax director at FTI Consulting, believes that this move could slow the investment market and added that the 1% increase in stamp duty will hit major occupiers and by extension landlords, as the costs are passed on. The proposal will however come as some relief to smaller landlords.
Northern Powerhouse ambitions
Osborne has promised £60m to the development of an east-west rail link named ‘Northern Powerhouse Rail’. The rail line aims to reduce travel times to just 30 minutes from 50 minutes between Leeds and Manchester.
The Chancellor also spoke about budgeting £75m to develop plans for an 18 mile road tunnel which will run under the Peak District. The aim of the development is to speed up journey times between Manchester and London.
Hull has been promised £13m to create its City of Culture project in 2017 which will include £5m to refurbish Hull New Theatre. Another theatre in Knowsley has been promised £5m in support of the Shakespeare North project.
Crossrail 2
The budget confirmed a government contribution of £80m for plans of the north-south Crossrail 2 project in London. Pushing the development of Crossrail 2 forward was a key recommendation of the National Infrastructure Commission.
In addition, the budget invited Transport for London to create proposals regarding how it could capture a proportion of future land value increases around local infrastructure projects in order to find a source of funding for such projects.
Mac Alghita, managing director for infrastructure at Arcadis, said: “The chancellor’s allocation for Crossrail ensures that the scheme remains alive, and provides the perfect opportunity for refinements over the next 12 months to improve the benefit/cost ratio.”
If you have any comments on regarding the budget or would like to discuss how the budget will affect you, please comment below and start a discussion!
[…] Osborne’s 8th budget, delivered on 17th March 2016, delivered some shock changes which could affect commercial property owners and landlords negatively. Osborne unveiled an […]