Autumn Statement 2015
Colliers International give their reactions to The Chancellor’s Autumn Statement
In response to The Chancellor’s Autumn Statement today, representatives from a cross section of business lines at Colliers International have given their initial reactions and discuss how the announcements might impact the commercial property sector.
Impact on commercial property…
Walter Boettcher, Chief Economist, Colliers International, said:
“Budgets and spending reviews usually have only indirect impacts on commercial property. This time is no different except that the indirect impacts are substantial.
(1) The housing initiatives are of sufficient scale to buoy confidence in the newly emerging commercial property investment class based on residential assets.
(2) Further devolution initiatives coupled with transport investment shows the Chancellor is committed to regional rebalancing of economic activity. Commercial property will benefit from the many developments that can ‘piggy back’ on to new infrastructure - as demonstrated with Crossrail in London.
(3) Local councils keeping the proceeds of local asset sales will no doubt also give a boost to encourage local regeneration and development.
Mark Charlton, Head of Research and Forecasting, added:
“The creation of one million extra jobs over the next five years will support continued improvement in the occupier markets. More people in work and increasing wealth will specifically help support the recovering retail sector.
“HMRC's restructuring towards a digital service could also result in some local market office stock being released and the facility for local authorities to retain 100% of asset sales could prompt a further review of real estate holdings.
“The announcement that the government is to commit to the largest road building programme since 1970s must be good for the logistics sector – and UK businesses generally.”
On House Building Initiatives…
Jonathan Manns, Director of Planning, said:
“Today’s Autumn Statement, from a Treasury that has taken a keener interest in planning than many others, clearly affirmed the Government’s pledge to increase home ownership. The Chancellor confirmed extension of the Right to Buy to Housing Association tenants and of the Help to Buy in London, with the latter offering buyers with a 5% deposit a loan of up to 40% of the value of a new build home for an interest-free period of 5 years. Alongside this was a cap on housing benefits at a time when rents, in many parts of the country, are growing more quickly than inflation. Thus, with the words “we choose to build the homes that people can buy", George Osborne marched further towards reforms that will mark a fundamental and seismic shift in the future shape of Britain’s built and social landscape. Alongside the Housing and Planning Bill, currently at House of Commons Committee Stage, the Autumn Statement pursued an approach that will see affordable housing, as a traditional Social Rent product, become a thing of the past, replaced by a plethora of part-ownership tenures. Truly “affordable” homes which currently exist appear destined for sale into a market fuelled further by additional cheap home-owner debt, not only continuing to drive up prices but potentially replaced by less affordable alternatives in less appropriate locations. Delivering its aspiration for home ownership may well come at the cost of precisely the mixed and balanced communities which the Government is eager to foster and create.”
Ashley Osborne, Head of UK Residential, said:
“The announcement that Stamp Duty is to rise 3 per cent on buy to lets will not put off buyers but is likely to put up rents as Landlords seek to recoup their costs.”
Toby Greville, Director, Residential, added:
“The twenty-six Enterprise Zones announced across the UK are a welcome measure for the housing market as it will help to reduce the relentless upward pressure on house prices in the South East. In Central London however, Help-to-Buy schemes will deliver free money into the housing market but effectively inflating house prices in the Capital in the process.”
Walter Boettcher adds:
“The Chancellor’s housing initiatives are of sufficient scale and have been conceived within a strategy that gives further impetus to a newly emerging commercial property investment class, which is based on residential assets. As a result, we envisage commercial investor confidence in private rental sector (PRS) to strengthen, as will long-term investment in infrastructure as these go hand in hand with house building and accommodating a growing population.”
On Business Rates Reform…
John Webber, Head of Rating, said:
"Business rates are kicked into the long grass yet again by this Chancellor. And with a record-breaking 255,000 rating appeals outstanding, the system is creaking. With further complications to the way Local Authorities are funded, the question has to be asked whether the so-called 'devolution revolution' is a work of fiction – what business can plan beyond the next 12 months for what they will pay in business rates?"
Walter Boettcher adds:
“The rating issue has not gone away, and his failure to address this head on might be linked to a ‘let sleeping dogs lie’ mentality. I suspect though that the dogs are not actually asleep.”
On Tax reform…
Walter Boettcher, said:
“Osborne continues to progress tax reform, especially international ownership of UK residential property and buy-to-lets. The real end game though is tackling abuse of transfer pricing abuse by transnational companies. No new steps are apparent which will disappoint UK shop keepers suffering what is considered by many to be unfair competition.”
James Shorthouse, Head of Specialist Divisions, said:
“The Chancellors decision to reverse the tax credit changes will impact positively on low income families, and on the pubs, restaurants and other small businesses where they spend their leisure time. “
Walter Boettcher, said:
“The devolution of rate receipts to local authorities to cover increased costs of social care should give a boost to the struggling care home sector. The scope of the social care problem though is much greater than marginal gains to be had by granting a nominal increase in local taxation to cover the problem.”