Briggsy’s Property Blog: Chancellor misses empty rates opportunity
A WEEK after George Osborne’s Budget and the dust is settling for the property community.
Well, I say settling, but in reality there weren’t too many measures announced to make the atmospheric particles get excited.
Of the property measures made by the Chancellor, there has been a mixed response to them.
Focusing on the positives, the government’s reinstatement of financial support for first-time buyers has got be welcomed.
Some 10,000 first-time buyers will be eligible for the Firstbuy scheme. However, looking at the small print, the £250m government pledge to the scheme will only last for one year.
Under FirstBuy, first-time buyers below an income threshold will gain access to a 25% equity loan while the government and housebuilder will also put in stakes.
Mr Osborne also announced steps to improve the planning system, including the promise of a “presumption” in favour of sustainable development and the removal of national targets on the use of previously developed land.
Reacting to the moves, Jeff Pearey, head of the Leeds office of Jones Lang LaSalle’s Leeds office, said: “The Chancellor’s announcement, that there will be a new presumption in favour of development so that the default answer is ‘yes’, has to be good news for the development community.
“The planning process has long been regarded as time consuming and expensive; hopefully this stimulus, together with other measures aimed at the planning system, will be seen by developers investing in our region as changes for the positive.”
The proposition of scrapping the 2% conversion charge of a property portfolio into a real estate investment trust (Reit), providing another incentive for investors in the commercial and residential property markets, was also announced.
There was a mixed response to the creation of 21 Enterprise Zones, two of which will be in the Leeds and Sheffield city regions.
Although the zones will enable businesses to get a 100% discount on rates, capped at £275,000 spread over five years, and have access to superfast broadband as well as allowing local authorities to retain any increase in rates for 25 years to plough back into the development, there is concern that businesses may flock to the zones to enjoy their benefits, leaving business parks and other locations they’ve come from, empty.
However, for many in the property sector the biggest omission from the Budget was any announcement on the reversal of empty rates property relief.
The coalition’s earlier decision to slash the threshold for empty rate exemption on vacant properties with a rateable value of less than £18,000 a year to only £2,600 per annum is being seen as a major setback for development.
Graham Isle, associate partner at Sanderson Weatherall, said: “Ultimately from April 1, landlords will have to consider their portfolio’s and decide if they can afford to hold onto them. This could lead to dramatic increase in demolition activity leaving many would-be sites lying empty.”
The firm is urging those with vacant properties in their portfolios and owners who may be liable to a rate charge, to work to avoid or mitigate their prospective liabilities by the submission of suitable rating appeals or look to circulate occupancy where possible, around larger sites.
Mr Isle added: “Landlords and investors are going to have to make some shrewd decisions whilst financial headaches for non-domestic property owners will continue in 2011.”
And Stephen Robertson, the director general of the British Retail Consortium, welcomed an extension to business rate relief but warned: “The business rate relief holiday extension is second best to full re-instatement of Empty Property Rate Relief.
“There is still much more that needs to be done to bring predictability and affordability to the business rates regime for all companies.”
The opportunity was there for the Chancellor to score a lot of brownie points from the property community but he failed to capitalise.