Commenting on the Budget, Simon Rubinsohn, RICS chief economist, said:
Changes to SDLT and REITs:
“RICS is pleased that the Chancellor has listened to our calls to make changes to stamp duty and Real Estate Investment Trusts (REITs) in order to support investment in house building. As an organisation we have been calling for these changes for several years and have worked closely with the Treasury and other industry bodies to help support this new approach to rented housing. The bulk purchase rule change is particularly welcome as it will mean that stamp duty is charged on an average price per unit rather than the total transaction cost.
“More people are now choosing to rent their home, particularly young professionals and those who are looking for flexible accommodation. Changes to REITs and stamp duty will help encourage large investors including pension funds into the sector providing a revolution in how rented homes are supplied. Changes to these systems will lead to more high quality properties which are a genuine alternative to owning a home.
“The most recent RICS lettings market survey showed that rents are continuing to rise as there are a lack of homes available for rent. Increased investment as a result of changes to stamp duty and REITs will help increase the range and affordability of rental properties.”
First Buy scheme for first time buyers:
“Access to equity loans could help many people who thought they were locked out of home ownership take their first step on the housing ladder.
“Opening up the housing market to first time buyers will be essential to help support economic growth. This is a key area as the lack of mortgage lending has significantly reduced the number of homes being bought and sold which in turn has led to low housing housebuilding levels. Although it would not be a solution to all housing problems this could represent the first step towards a vibrant and sustainable property market and assist the economy recovery.”
Enterprise zones:
“It is not clear how effective new enterprise zones will be in stimulating long term sustainable development beyond an initial boost. While the tax breaks and changes to planning restrictions may draw short term investment into an area they also have a number of downsides.
“The total cost to Government can be expensive and there often needs to be other public investment in areas such as transport infrastructure.
“Enterprise zones also draw development from other nearby areas that do not receive benefits, in some cases simply shifting local economic problems from one area to another. While they may have helped some areas in the 1980s, enterprise zones are unlikely to have the same impact now.”
Land auctions:
“RICS is concerned that the Government has not thought through the effectiveness of land auctions and the level of impact they will actually have on the amount of development land being made available. It seems unlikely that landowners will be willing to sell if they think they can benefit from gaining planning permission, which could deliver far greater profits. There will also be difficulties regarding sites where there are multiple ownerships, in particular brownfield sites.
“The proposed land auctions do not adequately respond to the need for long term changes to the planning system to encourage investment. Instead of concentrating on a small number of sites steps should be taken to align spatial planning with sources of public and private investment. In particular there should be effective investment in infrastructure and changes to the planning system to create the conditions for investor confidence."
Use class changes:
“RICS welcomes steps to tackle under use of buildings but the wider impact on the commercial property market also needs to be considered. As the economy grows there will be a need for additional accommodation for expanding and new businesses and too many conversions to residential property could mean that appropriate space is not available. Short sighted changes could lead to a lack of commercial property, delaying the recovery.
“This situation could be made worse by the Government’s continued imposition of empty property rates which are significant barrier to speculative commercial property development.”
