What does the Autumn Budget 2017 mean for the commercial property world and businesses looking for offices to rent, shops, workshops, storage and industrial units to rent and buy?
On the business community’s biggest headache, business rates, the Chancellor announced business rates increases will be based on the CPI rather than RPI two years earlier than planned. A glimmer of good news for commercial property landlords, tenants and business owners.
Business Rates was listed as point 21 out of the 25 Things you Need to Know about the 2017 Autumn Budget, according to HM Treasury:
The Treasury states:
Business rates will switch to being increased by the Consumer Price Index (CPI) 2 years earlier than planned
Business Rates will rise by CPI from April 2018. Business rates currently rise by the Retail Price Index (RPI), a different way of measuring inflation which tends to be higher than the CPI.
Business rates revaluations will take place every 3 years, rather than every 5 years, starting after the next revaluation, currently due in 2022.
Boxpod has been calling for business rates reform for years, wanting a fair system for all. Disappointingly, it doesn’t seem to be high on the govenment’s agenda.
MD, Nick Marlow said: “There is positive news for first time buyers and this will encourage a sluggish housing market and help drive the economy. On business rates, however, there’s nothing to give huge cheer. As with previous budgets, the Chancellor has brushed over the rates issue with a very loose, unexplained offer of a business rates hardship fund which supposedly offers local authorities the ability to grant discretionary relief for individual cases where particular hardship occurs. Hmmm! What does this actually mean? Nothing, I think, and many small businesses will continue to feel the squeeze and pleas for support will fall on deaf ears.”
Nick believes there’s little cheer on the transitional relief ceiling with businesses enduring increased rates under the 2017 revaluation.
Further business community reactions:
Following Philip Hammond’s Budget speech, the FSB’s national chairman, Mike Cherry, said:
“Overall, this is a business-friendly Budget. The Chancellor’s vision for an inclusive economy includes a set of measures that will boost confidence across the small business community as they face extremely challenging trading conditions.
“1.5 million modest-earning small firms and the self-employed will be relieved that we have seen off a VAT tax grab that would have caused huge economic damage. Instead, FSB is ready to work with the Treasury to simplify an over-complicated tax that on average takes a business a whole week to administer every year.
“We welcome the careful approach to protect diesel van drivers while at the same time addressing air quality. We also welcome the fuel duty freeze, which is vital to so many local businesses for customers, suppliers and staff.
“FSB presented a series of reforms to the Chancellor to make the business rates system fit for the future, and we are delighted to see many taken on board to improve a tax that so badly undermines economic growth. We are particularly proud to see the elimination of the staircase tax, a victory that FSB has campaigned hard to secure over the last few months.”
James Roberts, Knight Frank, Chief Economist said:
“The Chancellor’s Budget speech has given the property industry lots to think about. The OBR’s forecast that 600,000 jobs will be created by 2022 suggests the property market has reason to feel confident about future demand; as a high level of employment is the bedrock beneath a strong real estate market. Nevertheless, the downwards revision of the GDP forecast is a concern, and will dampen business confidence at a time when there is already a lot of Brexit gloom circulating.
“The rise in the national living wage, and increases in the thresholds for income tax, should put more money in consumers’ pockets, which will ultimately benefit the markets for retail property and warehouses, given the rise of e-shopping. The government’s push to support digital industries will also drive activity in the office market where, in both London and the regions, the technology, media and telecoms (TMT) sector is overtaking finance as the main source of demand.”
Giving his initial reaction to the Autumn Budget, Dr Adam Marshall, Director General of the British Chambers of Commerce (BCC), said:
“Chamber business communities wanted the Chancellor to focus on the basics – rates, roads, and ringtones – and will be pleased that they will see some action on all three fronts.
“While more remains to be done to reduce the impact of business rates on investment and growth, the Chancellor’s decisions will lessen the impact of rate rises on hard-pressed firms in many parts of the country from next April. Chambers campaigned hard for a reduction in the relentless rises of this iniquitous tax, and will be pleased that the Chancellor has listened and reduced the burden.
“Commitments to delivering road and rail infrastructure, and working to improve mobile phone signals on key transport corridors, will help support local business productivity.
“Our business communities will welcome the Chancellor’s marked focus on helping places achieve their potential. The announcement of new trains for the Tyne and Wear metro, new tax arrangements for the North Sea oil industry, devolution deals for many of our major cities including Belfast, and housing growth in the Oxford-Cambridge corridor all respond directly to key local business needs. The collective, real-world impact of these and other targeted interventions could be significant.
“Despite the inclusion of a number of announcements that will support business communities in the short term, more will still need to be done over the coming months to lay the groundwork for a successful Brexit transition. Businesses will expect greater boldness from the Chancellor – and more radical support for infrastructure and investment – once a Brexit transition period is secured and the shape of a UK-EU deal becomes clearer.”
Budget Key highlights:
What are you views? Is this a good Budget for you and your business?