Budget 2014: A mixed bag for property sector
By Andy Coyne - Editor, West Midlands
PROPERTY firms in the region have expressed disappointment that Chancellor George Osborne didn’t act on their calls to reform business rates.
Mark Clapham, director of rating at Lambert Smith Hampton in Birmingham, said: “The Chancellor announced that this is a budget for ‘makers, doers and savers’, but what about commercial property landlords, developers and occupiers?
“George Osborne’s decision to extend the business rate discounts for companies in enterprise zones is a welcome move but it isn’t enough to help the wider commercial property market. Tinkering around the edges will have little impact on the supply constraints that are acting as a drag on economic growth.
“As the UK takes steps towards a full financial recovery, the Chancellor should have done more to address underlying issues in the interests of growth. It’s another missed opportunity.”
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David Clark, a senior surveyor in DTZ’s retail management team in Birmingham, said: “Whilst we would have liked more decisive action on business rates to reduce the overheads of our retailers, we welcome the Government extending the grant for small businesses to support 100,000 more apprenticeships.
“SMEs are an important part of the economy and assisting them in generating employment opportunities will help to create a more prosperous economy.”
There was better news on the residential development front.
Michael Brough, the Birmingham-based director who leads property consultancy JLL's residential services team in the Midlands, welcomed the Chancellor’s announcement that the Help to Buy scheme is being extended to 2020.
However, he believes that adding four more years to the controversial initiative fails to address the biggest challenge facing homebuyers.
"No-one could deny that HTB has had a dramatic impact on the housebuilding sector, which is great news for people looking to get on to the housing ladder and for the construction sector, which let's not forget is still the biggest element of our manufacturing industry," he said.
"However, unless this Government - or the next - can persuade the High Street banks to start lending again on a significant scale, then when HTB ends in 2020, we'll inevitably see another mortgage drought. We need the Chancellor to put real pressure on lenders to change their approach to the housing market.”
Mark Perkins, chief executive of Shepherd Group Built Environment, said: “The welcome extension of the Help to Buy scheme to 2020 represents a now-or-never opportunity for the construction industry to take the reins and shape the economic future of the UK.
“And while these bold headline grabbing announcements will dominate the news agenda, it is now up to the Government to invest in and support the construction industry so that we are truly ready to deliver on these ambitious targets and contribute towards Mr Osborne’s vision of a ‘resilient economy’.”
The idea of allowing warehouses and light industrial units to be converted for residential use was also welcomed.
Joe Williams, a surveyor in the residential development & consultancy team at DTZ in Birmingham, said: “The Government’s proposals to consider enabling the conversion to residential use of warehouses and light industrial structures through permitted development rights is encouraging albeit we will have to wait and see what the actual effect of this would be.
“Whilst it may encourage some speculative developers to pursue opportunities that would ordinarily be fraught with planning risk, in reality developers will only convert properties which provide them with a financial return.”
And Steve Hemming, director of planning and development consultancy at Lambert Smith Hampton in Birmingham, said: “There isn’t much for the commercial property market to cheer in the Budget, but the possibility of a further relaxation of the rules regarding ‘change of use’ applications will be welcomed by the industry.
“The Government’s revisions to the administrative process for converting offices into residential accommodation, which came into effect in May 2013, have been widely embraced, with a 500% rise in the number of change of use applications.
“Our research reveals that applications for almost 10,000 new residential units were made in just six months.
“Any extension of the rules to allow a broader range of commercial properties to be converted into residential premises will help to remove obsolete stock from the market whilst also creating much-needed new homes, and so is a ‘win-win’ for everyone.”