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What can the property industry expect from this week’s Budget?

In its 2019 election manifesto, the Conservative Party committed to a fundamental review of the business rates system.

With the party having gained a majority in government, we should expect more details of this review to be announced in the Budget. Any review will have to consider real alternatives to the current regime and a land value tax system has been rumoured as a possible replacement.

A move to a land value tax would certainly be a fundamental step and would raise several key questions for commercial real estate, including who would ultimately bear the cost. What would the implications be on commercial rents if rates were stripped from the occupancy cost and what might the impact be on property investment values? There would also have to be detailed consideration given to how a land value tax would be set and administered as a direct rates replacement and its interaction with agricultural land, which is currently exempt, and residential land, where council tax is currently applied.

Due to the complexities and challenges with such a significant move, any potential change would likely be seen in the long-term. As a result, some additional short-term rates relief measures are expected to be included in the Budget. These are likely to be aimed at ameliorating the high-street bloodbath and levelling the playing field upon which online and bricks-and-mortar retailers compete.

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With the UK’s housing crisis posing a problem for the government that won’t go away, we will no doubt see more measures announced on residential property. Successive governments have put headlines ahead of action when it comes to tackling our housing shortage and I fear the mooted increase in stamp duty land tax for non-residents falls firmly into that category.

The proposals for a surcharge on overseas buyers are especially jarring right now. Presenting the UK as an open economy that welcomes overseas investment should be high on the government’s agenda.

Demand-side measures, be they adjusting stamp duty land tax rates or Help to Buy, have created market distortions but haven’t tackled the issue at source. Building more new homes requires supply-side intervention by the government. This would include simplifying the planning process, incentivising town-centre repurposing and where necessary, local and national government coming together to take the lead on building new homes.

Beyond these topics, the industry will be hoping most for an uneventful Budget after successive years of change. In an uncertain world, the chancellor should give the industry breathing space.

By Russell Gardner

Source: Property Week

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Property industry worried about coronavirus

Industry figures are worried public concerns about coronavirus will have an adverse effect on business, after the number of reported cases reached 115 yesterday.

The market has had a busy start to the year, but there are fears the virus will put the breaks on activity.

Jonathan Sealey, Hope Capital’s chief executive, said: “Over the past few months it has felt as though we were experiencing a real sea change in the market as the political arena became less of a focus.

“We have definitely seen the busiest start to any year so far as people started looking forward to a more stable environment.

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“Unfortunately, that may well be up in the air again as nervousness surrounding the COVID-19 outbreak takes hold.”

And Richard Pike, Phoebus Software sales and marketing director, said: “We’ve started the year well but there is one black cloud that is hard to ignore, and it is one that is already having an effect on the world’s economy.

“How the coronavirus effect will translate down the line into the housing market is anyone’s guess, but it is unlikely to have no effect at all.”

One commentator speculated whether the virus fears could push the regulator towards loosening mortgage affordability rules.

Miles Robinson, head of mortgages at online mortgage broker Trussle, said: “While we’re yet to see the impact of uncertainty linked to coronavirus on the housing market, if lending continues to slow – the time might be coming for the regulator to consider a gentle easing of restrictions around affordability.”

Source: Property Wire