Budget 2018: three simple steps

We are weeks away from the first “proper” Autumn Budget and I have a simple message for the chancellor: help us to put our money where your mouth is, writes Melanie Leech. The prime minister hosted a Downing Street summit on housing on 17 October and (in her own words) stated the government’s ambition to tackle one of the biggest challenges facing our country today – fixing the broken housing market. Stamp duty Speculation has been rife in the media in recent days that the chancellor is considering stamp duty land tax relief for first-time buyers in London. I’m encouraged to see he recognises that SDLT is an obstacle in the housing market. This is welcome, as are any moves to make those first steps onto the housing ladder more accessible. However, the bigger prize is to use changes to SDLT strategically to stimulate supply. SDLT is a transactional tax, an explicit barrier to social mobility, putting people off moving house. It’s also deterring investment into housebuilding, which ultimately has a knock-on effect on the volume of affordable housing provision. While we are delighted with the recognition and support now being given by the government to the build-to-rent sector, the 3% SDLT surcharge remains an unnecessary and counter-productive barrier to a sector with billions of pounds available to deliver high-quality rental homes. If the chancellor is not brave enough to abolish it completely, then the first priority should be changing the guidelines that homes built for affordable private rent (the rental version of affordable housing) are subject to the 3% SDLT surcharge. The chancellor should cut the surcharge for this tenure to encourage the provision of greater levels of accessible homes. Business rates Just as Britain needs to demonstrate it is open for business, September’s RPI has been confirmed at 3.9%, leading to a £1.1bn increase in business rates from April next year. My second challenge to the chancellor is to take action to alleviate this damaging increase. We, and a number of business organisations from across the economy who have written to the chancellor, are in no doubt – this sharp increase will have a negative impact on growth and business investment just as businesses make consequential decisions in preparation for departing the EU. What is abundantly clear is that when the UK’s commercial property tax is far higher than elsewhere in Europe and across the OECD it places British business at a distinct disadvantage. The current system is broken and at a tipping point. In addition to short-term measures to address this sharp 3.9% increase we must improve the system in the longer term to ensure it is sustainable for decades to come. Tax avoidance strategy My third simple action is for the chancellor to delay the implementation of the new corporate interest and loss restriction rules. We are genuinely grateful that the chancellor and his department have understood the particular nature of real estate and done their best to ensure it is not inadvertently damaged by the new rules. We also commend the engagement that officials at HMRC and HM Treasury have had with stakeholders throughout the development of the new rules. However, the fact remains that these are extremely long and complex pieces of tax law (308 pages of legislation and 617 pages of guidance at the latest count) which have so far not even been scrutinised by parliament. It is in our view unfair and unreasonable to go ahead with an implementation date of 1 April 2017 and to expect businesses to comply with them. The chancellor should delay the effective date for the new corporate interest and loss restriction rules by a year and enhance rather than harm the UK’s reputation as a place to invest in and do business from. Melanie Leech is chief executive of the British Property Federation Photo: Matt LLoyd/REX/Shutterstock Click here for all the news, data and analysis affecting real estate in the Budget