“Britain has a plan and we are sticking to it” … the Chancellor’s opening words in his Budget delivered today inspires renewed confidence in the real estate sector as a route to economic growth. After the usual weeks of speculation in the media, Mr Osborne has delivered his second budget to the House, confidently telling us that “Britain has a plan and we’re sticking to it”!
The property industry plays a major part in Mr Osborne’s plan and topline measures, as we continue to filter through the reams of paper, include:
- Confirming that a consultation will take place into allowing change of use from commercial to residential without the need for planning consent
- Dropping the 2% charge to convert to a REIT as well as amending rules regarding the ownership of REITs, opening the door to institutional investors.
- Setting up a pilot Community Land Auction scheme allowing Councils to have 18 months to buy private land at a pre-agreed price
- Confirming plans to setup 21 Enterprise Zones in key LEP areas around the UK
- Abolishing 43 tax reliefs and reducing corporation tax to 23%
- Financial help to 10,000 first time buyers through low interest deposit loans
In addition to the headline changes, the Chancellor has also alluded to the Localism Bill currently making its way through the House. Mr Osborne has made it clear that the Bill, which includes the presumption in favour of sustainable development, is designed to speed up the planning system and is therefore pro-growth.
With less favourable forecasts for economic growth – official growth forecast for 2011 downgraded to 1.7% from the 2.1% forecast in November 2010 – the Coalition will hope this budget demonstrates that their plan includes more than just spending cuts. However, many will judge the success of this budget on what the key indicators of GDP and inflation do in the coming months.
For the property industry itself, the budget provides some relief and light at the end of the tunnel after months of speculation. However, the headline act remains the Localism Bill and the long terms effect it might have on development around the UK.