Budget: Cautious approval from property sector
THE West Midlands property and real estate sector has voiced a cautious approval of George Osborne’s Emergency Budget.
Property consultants King Sturge believes the Budget will help restore investor confidence while real estate services firm Jones Lang LaSalle says the hike in Capital Gains Tax is good for the housing market.
Meanwhile, Birmingham-based property group Real Estate Investors says the Budget was “quite balanced and necessary”.
Richard Goodall, King Sturge’s head of investment in Birmingham, said: “In a way, the previous weeks of spin have helped, because there were so many leaks about what might happen, that when they didn’t – a rise to 40% CGT especially – there has been a sense of relief.
“Major decisions had to be taken to reduce the deficit, which is always a bit of a gamble, politically and economically, but I think overall, the balance was about right.
“Potential inward investors, and the equity and bond markets, need to feel that our economy is on the right path, so they feel more confident about investing in UK plc, and increasing business optimism will stimulate the property market.”
Simon Dicken, from Jones Lang LaSalle’s residential development and investment team in Birmingham, said: “The clarity and instantaneous nature of the CGT hike is good news for the housing market. However, the 10% rise will not support or encourage investment in the private rental sector.
“The rise in CGT sets a precedent for the housing market which might cause investors to be wary around punitive taxation affecting investment in UK housing.
“With cross-party support of the increase, CGT will become a disincentive for investment in housing, with buy to let and the private rental sector facing a higher tax burden in the future.”
The firm’s head of residential research Rob Bruce added: “The emergency Budget announcement will have done little to calm the nerves of housing developers who were looking for the Government to honour spending commitments on new housing schemes.
“The proposed reduction in Government department budgets by 25% over four years will not help those waiting on housing lists or those unable to buy their own homes.”
Paul Bassi CBE, chairman and chief executive Birmingham property investment group of Real Estate Investors, called the Budget “balanced and necessary”.
“The raising of entrepreneurs’ relief to £5m from the proposed £2m is excellent and encourages enterprise and business,” he said.
“That is good because that is the only way we are going to get out of this mess.
“We knew this was going to be a hard and painful Budget but the Chancellor has taken the tough decisions and he has put some power back in the hands of those who create wealth and jobs.
“This will give confidence to the SME market and we also welcome the staged cuts in corporation tax as a move that will make both this country and this region increasingly attractive to inward investment.”
