‘Budget missed easy chances to help property sector’

"We suggested a number of ways of temporarily modifying the REITs (real estate investment trusts) regime which would have had virtually no cost for the Exchequer and these have been ignored.

"We had also pressed for one very simple change that would have encouraged institutional levels of investment in an alternative stream of housing provision through renting, namely the disaggregation of Stamp Duty on bulk purchases, but this has also been ignored. There is no empty rates relief, despite the traumatic decline of the high street.

"In trying to nibble the finger-nails of commercial rents in a boom period by introducing empty rates, Gordon Brown has cut off the hands of a sector which contributes over 5% to GDP, employing thousands of people through every stage of development. We urge the Government to use the powers left into empty rates legislation that allow for relief to be immediately reapplied.

"The measures designed to support housing sound impressive but it is not wholly clear how much new money is really on offer and how easy it will be for developers to access these funds – a large part of which must be spent this year. As for the plans announced yesterday to help with mortgage repayments, these have not received exactly enthusiastic support from the banks, while the extension of the asset-backed securities scheme is exactly what was suggested – and ignored – last November.

"The one crumb of comfort for the industry concerns a paragraph buried in the Budget report stating that the Treasury will now look seriously at the concept of allowing local authorities to use borrowing against future tax revenues to fund infrastructure. This is an idea that we have been pressing for some time; it’s good to know that our voice has been heard."

Ian Coull, chief executive of Segro, the UK’s biggest industrial developer, said: "It is disappointing that the Government has not announced any new plans to abolish empty rates. Empty rates will continue to see buildings demolished and occupiers who need a helping hand will continue to struggle.The real disappointment is the lack of any real changes on REITs which is where the real opportunities for turning around development existed."

Francis Salway, BPF president and chief executive of Land Securities, said: "The Chancellor made a declaration to be fair and to support long term investment but the Government’s refusal to reinstate empty rate relief wholly undermines this statement, particularly at a time when occupiers and developers are being equally hit by the downturn.

"Aside from the obvious effects of demolition, empty rates is a tax on hardship that defies any kind of logical thinking. We hope that pressure will continue to build over this and force the Government to make use of powers that exist to reintroduce relief immediately at 50%.

"The statement of the Government’s intention to explore new funding mechanisms with local authorities is a welcome recognition of the BPF’s work to promote interests in tax increment financing which has been so widely used in the USA.

"TIFs are an alluring tool because they promote economic development by earmarking property tax revenue from increases in assessed values within a designated area. There is growing support from the development community and the Chancellor’s positive remarks again show that the BPF’s voice has been listened to."

Peter Cosmetatos, director for finance and investment, said: "This was a very disappointing Budget for the property industry. This Government, which has been willing to throw countless billions at a pointless cut in the VAT rate and at the financial sector, has refused to listen to a small number of sensible, targeted industry representations which would have entailed little (and in some cases no) cost to the Exchequer and which would have given valuable support to businesses in the current environment.

"Pleas for greater flexibility in the REIT rules to allow the REITs to conserve cash and manage their businesses in commercially sensible ways through the downturn fell on deaf ears.

"The Chancellor also passed up the opportunity to introduce a stamp duty relief for bulk purchases of residential property, which would have brought liquidity to the housing sector and encouraged greater institutional investment in the private rented sector at exactly the right time in the cycle.

"And almost unbelievably, given the state of the property market and the wider economy and almost universal opposition, empty rates remain in place.

"This was a Budget of missed opportunities from a Government that seems to have lost its way."

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