Budget 2021: how the property industry reacted

Chancellor Rishi Sunak’s spring Budget touched on nearly every sector of the economy, and the property industry was no exception. From extending the furlough scheme and the business rates holiday to hiking corporation tax, many policies announced this afternoon will have far-reaching ramifications for real estate. Here’s what the industry had to say about it. Business rates holiday extension The business rates holiday will be extended until the end of June, and then discounted by up to two-thirds for the remaining nine months of the fiscal year. Jace Tyrell, chief executive of business group the New West End Company, said the holiday was “a lifeline” to many businesses. “However it delivers too little for major commercial centres missing out on tourism and office workers where rebuilding traffic, trade and tourists will require years of effort,” he added. Michael Scott, partner at law firm Addleshaw Goddard, added that it was “a short term measure in relation to a long term concern and does not lessen the need for an urgent and fundamental review of a system which is a very blunt, outdated and inaccurate instrument”. Meanwhile, Avison Young’s business rates head David Jones pointed out that the policy still leaves firms with multiple premises “out in the cold”. “The restrictions and caps in place have massive implications for businesses that trade from more than one premises. This saves the chancellor significant funds, but for medium to larger businesses the relief is severely capped, and we question how the chancellor arrives at a total package of measures under business rates adding up to £6bn.” Continuing the furlough scheme Companies will now be able to lean on the furlough scheme until the end of September, in a move which industry groups have said will help keep retail tenants afloat. Support will begin tapering off from July, when employers will be asked to start contributing 10% to workers’ salaries. That figure will increase to 20% in August and September as the economy reopens. Melanie Leech, CEO of the British Property Federation, said the extension “will bring many retail, hospitality and leisure businesses back from the cliff edge, providing them with much-needed breathing space as they prepare to re-open their doors to the public”. However, Jonathan Hubbard, head of hospitality for Europe and the Middle East at Cushman & Wakefield, said that while the measures were welcome, they would “barely scratch the surface of actions needed to address the real challenges ahead for hospitality businesses”. “The various measures… only go a little way to support the industry which has suffered more than most as a result of Covid-related lockdowns and international travel restrictions.” Stamp duty holiday extension The stamp duty exemption will be moved back until the end of June to bring it into line with the easing of other lockdown restrictions. The holiday enables people to save up to £15,000 in tax when they buy a property worth up to £500,000. The government’s mortgage guarantee scheme will also offer 95% mortgages for houses worth up to £600,000. Jasmine Whitbread, chief executive of business group London First, said: “While the stamp duty holiday has kept the housing market alive during the pandemic, the cut-off at the end of March threatened to derail chains across the country. “An extension to 30 June for those in the process is good news in the short term, but the Treasury should relook at the stamp duty thresholds to make them more balanced in the long term.” Bruce Burkitt, managing director at Property Experts, added: “The extended stamp duty holiday and 95% mortgage guarantee should serve as two effective mechanisms to ignite momentum in the market. “The Treasury is taking a much-needed big picture approach by focusing on the economic activity generated by people moving, the increase in property transactions, the jobs this creates and potential other tax revenues for the government.” Corporation tax increase Corporation tax will rise from 19% to 25% by 2023 for companies with profits of £250,000 or more. However a new “super deduction” will also help companies wipe out their tax bills by investing in property, plant and equipment over the next two years. The BPF’s Melanie Leech said: “While we are still in lockdown, now might not seem like the best time to hike taxes – but, with government borrowing having already reached record-breaking amounts, it’s inevitable the Chancellor will need to find ways to raise revenue. “A rise in corporation tax is a reasonable option, given it’s a tax on profits and so will predominantly target those businesses that have fared better.” Steve Taklalsingh, managing director of UK Business at fintech firm Amaiz, added: “We’re pleased to see small businesses considered in the corporation tax changes, by excluding those earning over £50k profit from tax increases. “However there is a worry about how this will be managed in the future. If the profit threshold, for example, doesn’t increase with inflation, it will provide less incentive for people to start businesses and risk investment.” To send feedback, e-mail alex.daniel@egi.co.uk or tweet @alexmdaniel or @estatesgazette Photo: James Veysey/Shutterstock