Colliers International – Summer Budget Responses
Property experts comment on the Budget’s impact on the Property Industry
Property experts from Colliers International welcomed the Chancellor’s Summer Budget as it confirmed many of their manifesto pledges, bringing greater certainty and improving business confidence.
Dr Walter Boettcher, Colliers International’s Chief Economist and Forecaster said: “There was little that impacted commercial property directly. Although the drop in corporation tax; the continued focus on regional regeneration; and in some measure the creation of the road-building and maintenance fund suggests that there should be increased opportunities for property development throughout the UK.”
Today’s Budget highlights according to experts at Colliers International included:
Dr Walter Boettcher, Colliers International’s Chief Economist and Forecaster said: “The real impact on business confidence came with the election of a Conservative majority in May. June purchasing manager indices and other recent survey data suggest that expansionary business investment is already gaining momentum after a period of pre-election weakness.
“The Budget provided confirmation of that this renewed confidence was not misplaced (e.g. reduction of corporation tax from 20% to 18%, bank levy, etc.). Improved confidence will have a positive effect on the UK’s occupier markets as UK businesses look in earnest for expansion space. More competitive corporation tax rates are sure to encourage major corporates to look favourable at the UK, including the ones that are already here.”
Mark Charlton, Colliers Head of Research and Forecasting, added: “Productivity was one of the major themes of the day. The potential for improved productivity growth as part time and temporary workers move into full time employment suggests that, going forward, Osborne may have more room to ease back on austerity measures to avoid choking off growth.
“The Chancellor said that Britain deserved a pay rise and the changes he has made to personal tax thresholds will boost household spending and help sustain improvement in the retail sector. His promise to create two million new jobs will also fuel demand for quality office and industrial space.”
John Webber, Colliers Head of Rating, said, “The Chancellor is still ‘coasting’ on the business rates review while ratepayers are drowning in them.
“Today, Osborne made several comments on how the UK was in a lower tax environment; yet he is overseeing a continued delay in the revaluation of the 2015 Rating List until 2017. In real terms that means 324 out of 421 retail centres surveyed by Colliers International are paying considerably more tax than they should be for the next two years at least, while 75 locations – predominantly in central London - pay less for the foreseeable future. As we see it, those with the broadest shoulders are not paying their fair share when it comes to business rates. The UK economy is not being rebalanced therefore the discussion papers on the three separate consultation papers on business rates continues.”
Andrew McFarlane, director and head of North West for real estate advisors Colliers International, said: “We’re supporters of the Northern Powerhouse because we understand that it will generate major change and numerous benefits to the North West and the wider Northern region over a generation and beyond.
“Despite the recent power outage sparked by a delay in electrification of the Trans-Pennine rail route, the far-reaching measures announced by the Chancellor to devolve further powers to Greater Manchester and to extend the process to Liverpool, Leeds and Sheffield, alongside the financial commitment to Transport for the North to allow it to genuinely connect the region, puts the concept of the Northern Powerhouse back on track to better enable our great Northern cities to compete as a united force on a global stage.”
Retail – Sunday Trading Hours
Paul Souber, Colliers Head of Central London Retail Agency, commented: “Colliers believes the devolution of Sunday trading hours to local, elected mayors will be welcomed by consumers and retailers alike. It will give greater freedom to shoppers and should provide a boost for jobs and particularly benefit town centres by generating extra commerce for local communities.”
Len Rosso, Colliers Head of Industrial and Logistics said: “The logistics sector received a major boost in the Chancellor’s budget statement today with duty on fuel frozen; and a massive commitment to sustained investment in our roads with the creation of a road-building and maintenance fund. Both these measures will help to reduce transport costs and this in turn will create a ripple effect felt by the haulage sector, retailers and ultimately consumers.”
Dr Boettcher, continued: “Clampdown on unreasonable tax avoidance and aggressive use of non-domiciled status may have further impact on London residential markets, especially since the recent imposition of capital gains tax on non-residents is still being digested. Foreign investors will be far more mindful of eventual exit strategies than they have been in the past. The impact though may go beyond Zone 1 and impact London property development companies that operate in Zones 2 and beyond, but are domiciled offshore. This could inadvertently put further upward pressure on rents and property values as these property companies try to recover these additional costs.”
David Eynon, Colliers’ Sustainability Solutions Associate Director, commented: “It seems the green agenda has come under further scrutiny in The Chancellor’s Summer Budget, as the Government has announced its intention to review the business energy tax landscape in the UK. This review will include the Climate Change Levy, the CRC Energy Efficiency Scheme and the Climate Change Agreement regime, all of which impact on varying sectors of business and industry across the UK, with the aim of reducing their associated cost burden on consumers. Additionally, increasing taxation on low emission vehicles will assist in funding improvements to the nation’s road network, but may hamper the wide take-up in this vehicle class, which in turn may impact on the UK’s ability to meet its national Climate Change and carbon targets.”