Duncan Harkness, Principal: “The current tax rate, the highest in the country, is unsustainable. Since Labour’s landslide victory, the industry has eagerly awaited Rachel Reeves’ budget, hoping it would address the public finance shortfall without stifling the much-needed economic recovery.
“While the business rates system requires much needed reform, introducing a new tax regime would create uncertainty for businesses with new and unforeseen imbalances – a move the government must avoid. The real challenge is whether they will commit to significantly lowering the tax rate (UBR). We consider this an affordable goal. By removing such barriers to growth and avoiding red tape, the government can demonstrate that they are listening and are ready to do something meaningful about it.
“In the North East and Yorkshire, high business rates charges are stifling the local economy and inward investment. The 2023 Rating List saw substantial uplifts in rating assessments, especially attributed to industrial and logistics premises, due to increases in rental values fuelled by COVID. If the new Government don’t take action regarding the ever-increasing Uniform Business Rate, the very sector that will drive the recovery of the country will continue to be penalised.”
Housing
Helen Collins, Principal and Managing Director for Birmingham: “Labour’s recent pledges of additional short-term funding is a positive step as is the consultation on a 5-year rent settlement and reductions in RTB discounts to preserve the existing supply of social housing.
“A long-term rent settlement is crucial to provide income certainty to social landlords to underpin investment in new homes and existing stock. It will support investor confidence which is crucial to channel more capital into the affordable housing market. While the existing fund-backed For-Profit Registered Providers are a very welcome addition, ultimately we need more new entrants and to attract greater allocations of funds to the sector. A ten-year settlement would provide an even stronger signal of certainty to investors and we look forward to seeing the detail of the consultation.”
In addition, I have some more comments from the national team on topics such as energy, devolution, capital investment and social housing:
Planning
Nicola Rigby, Principal: “The Autumn Statement and Spending Review highlight critical challenges for the planning sector. With a £6.2 billion funding gap and councils facing intense financial strain, achieving housing and economic growth targets requires decisive investment and a re-envisioned role for planning as a growth driver, not just a regulatory process. Properly resourced planning offices, alongside clarity in the NPPF, are key to speeding up housing delivery and meeting government economic growth goals.
“Local authorities urgently need funding to close the gap caused by a 43% cut in planning budgets since 2010. Developers are ready to pay more for faster approvals, which could help address this need. Clarity on ‘grey belt’ use near transit hubs could further unlock viable housing sites, and prioritising affordable housing delivery could address increasing annual homelessness and associated costs.
“For true impact, the government should publish the NPPF by year-end, confirm ‘grey belt’ definitions, and commit to supporting planners as strategic partners in growth. Through investment, streamlined planning, and public-private collaboration, the planning system can help deliver new homes and drive economic growth, building investor confidence in the process.”
Energy
Alan O’Sullivan, Director, Energy & Natural Resources: “Following the ditching of Labour’s policy plans to spend £28b on green investment and its recent shelving of some notable major infrastructure projects, the government needs to take action in supporting the energy sector.
“When combined with National Grid’s connections reform, Great British Energy can be the vehicle for the UK Government to make tangible contributions to unlock renewable generation and storage projects. The background of Nimbyism however, alongside planning delays, continues to undermine efforts to decarbonise the UK economy and lay the foundations to enable significant investment in other areas, particularly the ICT sector, such as data centres and AI.”
Tax on high net-worth individuals:
Natasha Patel, UK Head of Market Intelligence at Avison Young comments: “Proposed tax hikes for High-Net-Worth Individuals (HNWIs) are unlikely to trigger a short-term exodus from the UK property market. Many will weigh the impacts of uprooting their families against accepting higher taxes, similar to the post-GFC experience when fewer left than expected after the Cameron government’s tax changes for bankers and brokers.
“While there are concerns that the UK may appear less welcoming to HNWIs and entrepreneurs, potentially driving fast-growing companies to lower tax jurisdictions, it’s unlikely that the largest corporations or established SMEs will exit the country. However, increased employer National Insurance contributions could slightly hinder headcount growth.
“Ultimately, while tax is just one of many factors businesses consider when hiring, we expect a slower recovery for UK property markets compared to a scenario where the UK remained friendly to HNWIs and entrepreneurs. This shift will impact property at the margins but won’t drastically alter broader trends.”
Devolution:
Stephen Cowperthwaite, Principal, Managing Director, Regions and Liverpool, Avison Young comments: “Devolution in England remains inconsistent, leaving areas like Southampton, Stoke, Chester without coverage. What impact would extending devolution have on these regions? And as for existing Combined Authorities, what practical difference would further devolution make? While additional powers over transport, education, employment and housing are positive steps, securing adequate funding is essential.
“Given the rising pressures on public sector finances, a move toward longer term funding settlements could bring much-needed stability. To maintain the UK’s reputation as a hub of innovation, we need to create the right environment that empowers local leaders to partner with higher education and businesses, enabling long term planning and growth.”
Capital investment:
James Roberts, Director, Insight, Avison Young comments: “The government’s shift to allow long-term capital investment brings mixed implications for real estate. While it will drive major public sector construction projects, this surge is likely to increase building costs, potentially sidelining some commercial developments.
“On the positive side, infrastructure projects can create new economic hubs, as occurred with London’s Elizabeth Line, that will ultimately need new business space and housing, presenting future opportunities for developers.”