Budget: Welcomes and warnings from property sector
THE Royal Institution of Chartered Surveyors has welcomed the Chancellor’s decision not to reduce capital spending beyond the cuts announced in the March budget but warned of wider implications for the property sector.
RICS said the construction industry was a powerful engine of growth, and it had emphasised in its Emergency Budget submission that any further cuts in capital spending would have undermined the tentative economic recovery.
“This Budget had to address the UK’s structural deficit, and there will undoubtedly be repercussions for the property market,” said director of external affairs Mark Goodwin.
“The combination of raising the rate of CGT and VAT may limit growth and cost jobs in the sector.
“RICS had warned that a significant rise in CGT would threaten the supply of development land and deter new investors from entering the private rented sector. This risk will be tempered by the lower than expected increase.
“We expect that the reduction in corporation tax rates over the next four years will stimulate the commercial occupier market and the wider economy by encouraging greater business investment.”
He said despite expected cuts to the public sector, regional property markets may also get some help from labour market initiatives to reduce the start-up costs of hiring employees.
This may be especially helpful for smaller enterprises, he added.
On a regional level, Debbie Walsh, head of public policy and communications, RICS West, said the commitment to complete Birmingham’s New Street Station was welcome.
“This will continue to provide much needed jobs within the construction sector, and associated industries, and ultimately create a gateway to the West Midlands region that will attract and welcome both the business and tourist visitors that are so vital to the future success of the regional economy,” she said.
“The recognition of the vulnerability of certain regions, including the West Midlands is encouraging. We cannot deny the inherent structural issues that we face here in the West Midlands so the Regional Growth Fund to finance large regional capital projects is welcomed.
“The rise in VAT from 17.5 to 20% is disappointing. Given that we have been asking for a reduction on VAT to 5% for retrofit activities, this increase can be seen as a regressive step in helping us meet the UK carbon targets.”
The emergency budget has overlooked the construction and property industry says Adrian Aston, a director with Birmingham-based property and construction consultancy Wakemans.
“George Osborne says he has delivered a budget that shows Britain is open for business but it has not addressed many of the difficulties facing the construction and property industry,” he said.
“We were hoping that the Government would support energy efficient buildings by reducing VAT on energy – efficient materials and repairs.
“It is disappointing that they have not taken the opportunity to do this and boost the retrofitting market and show a commitment to developing greener construction.
“They have also missed an opportunity to zero rate VAT on repairs and maintenance work which would have helped construction. At the same time the VAT increase will have an impact on consumer confidence and reduce spending on home improvements.”
House builder Miller Homes says the Emergency Budget could have been worse for the sector.
“VAT is going up but so is the personal tax allowance so it wasn’t all bad news,” said national sales and marketing director Sue Warwick.
“The Government seems willing to help us to protect our biggest asset as a nation, our homes. There was no mention of pulling the rug from under the feet of first time buyers by scrapping Home Buy Direct and no mention of hiking stamp duty up either.
“Let’s not forget that the country is on the brink of a housing shortfall crisis and meddling with anything that affected the property market would have been a disaster for the country long term.”
- Budget: At a glance
- Budget: Public sector loses out to the 80:20 principle
- Budget: Cheer for those on state pension
- Budget: Hopes boosted for manufacturing-led recovery
- Budget: OBR underestimates fiscal tightening – ITEM Club
- Budget: Welcomes and warnings from property sector
- Budget: Entrepreneurs ‘can earn more’ says Chancellor
- Budget: Entrepreneurs ‘can earn more’ says Chancellor
- Budget: Levy on banks to raise £2bn a year
- Budget: Sigh of relief at caution on CGT
- Budget: Chancellor puts New St on the right track
- Budget: Why George survived the tightrope walk – for now
