Strutt & Parker's reaction to the 2018 Budget
Stephanie McMahon, Head of Research at Strutt & Parker, said: “Fiscal Phil’s 2018 Budget focused far more on the retail sector than residential property. However, it was interesting to note in the small print that the government will publish a consultation in January 2019 on a SDLT surcharge of 1% for non-residents buying residential property in England and Northern Ireland. We are encouraged to note that this proposed extra tax is being explored further before being implemented. However, the timing of the announcement will fall at a very interesting time in Brexit negotiations, whatever is decided. Further taxation on overseas investors may be viewed as a crowd-pleasing policy but it is worth questioning whether this extra tax is really required at the current time. UK domestic buyers now account for 80% of our transactions in London at Strutt & Parker.”
CAPITAL GAINS TAX
Kate Eales, National Head of Lettings at Strutt & Parker, awaits the results of the consultation into capital gains tax with interest. The Chancellor said he would be looking into limiting capital gains tax relief to prevent it being used by owners not using their home as their main residence. She comments: "If changes come into effect it could mean that lettings relief for capital gains tax is no longer applicable to landlords, regardless of whether the property was at one time their home. This may well be closing a loophole but would affect many landlords who at the moment are choosing to rent out properties they own and keep them as investments for the longer term, after they themselves have moved out. This could represent yet another tax on the private rented sector which is already facing considerable challenges."
Vanessa Hale, Director, Research at Strutt & Parker, was encouraged to see that £200m of funding would help to connect primary schools and libraries to full fibre broadband in some of our more remote locations. The first wave would include the Borderlands, Cornwall and the Welsh Valleys. She comments: “Improvements to broadband technology are crucial for the UK to thrive post-Brexit. Our most recent Housing Futures survey shows that broadband is now seen as an essential for the majority – up from 48% five years ago to 57% today. In the 21st century, broadband has become a crucial part of everyday life and it is vital that rural communities are not left behind. This is a step in the right direction.”
Mike Tustin, director at forestry agency John Clegg & Co, said he welcomed the £60m funding for tree planting in England. “We are happy to hear there is a move towards increasing funding for tree planting. This is against a background of apparent enthusiasm for woodland planting, as shown in the appointment of Sir William Worsley as the country’s first national tree champion, and can only be welcomed. It is a positive step for the forestry industry at a time when we desperately need to see further afforestation in England.”
HIGH STREET REFORM PLEDGED WITH A LITTLE RELIEF IN BUSINESS RATES
Ian Allison, Director, Business Rates, BNP Paribas Real Estate, said: “At the despatch box this afternoon the Chancellor of the Exchequer pledged measures to rejuvenate the High Street. Of relevance is a reduction to reduce “independent” retailers’ rates bills by one third for two years up until the next revaluation in April 2021.”
“It will not have gone unnoticed that the Chancellor was keen to stress “independent shops, restaurants and cafes”. In 2014 Retail Rate Relief could be claimed by all retailers – ‘large’ and ‘small’ – and the qualification criteria extended to retailers operating from non-retail premises. This time the Chancellor’s choice of words indicates that the relief will be eligible to ‘small’ retailers with a ‘frontage’ and the relief looks set to be more generous with an average saving of £8,000 per annum for a qualifying retailer whose shop has a rateable value of less than £51,000. In 2014 the relief was capped at £1,000 and in 2015 it was capped at £1,500.”
“This measure was introduced alongside a £675m fund aimed at rejuvenating the High Street and a relaxation of planning controls concerning a change of use from retail and offices to residential in order to increase footfall whilst tackling the housing shortage.”
“Proponents seeking wholesale reform of the business rates system will be disappointed, as the Chancellor took the opportunity to confirm that the next revaluation (in England and Wales at least) will be in 2021 with premises’ rateable values based on rental levels prevailing at 1 April 2019. However, also delivered alongside these pledges is the UK Digital Services Tax, which is aimed at levelling the playing field between on-line and bricks and mortar retailers."