The government raids the property sector

Last year Sir Howard Davies delivered a report – the report looked at airport capacity in the South East and what did it say? Back a new runway at Heathrow. I’m not going to say that is right or wrong, the point is that Britain needs more airport capacity, sadly due to our rail network air capacity needs to be dominant in the South East yet when the budget was delivered this significant infrastructure project was not mentioned. Odd!



Infrastructure was mentioned in the budget in the shape of Crossrail 2 (largely irrelevant to me as a Northerner but agree needed) and HS3 (thank god!). In the London centric world we live in HS2 seems to have been getting more priority but HS3 is more needed. It’s a joke that the cities of the North struggle with hourly connections yet in the South, similar mileage is covered at significantly high frequencies. One can hope HS3 doesn’t become another Heathrow – all talk and no action.



That was strike 1 in the budget swiftly followed by strike 2, another raid on the property industry with higher rate of stamp duty for commercial property transactions – talk about a kick in the teeth and well done to the BPF for criticising so quickly. With deal sizes large in London compared to the regions and the amount of Sovereign wealth it may dampen the market but in the regions it will dent it big style! And then to complete the phrase that things come in three, he then hit the PRS market with a 3% levy on stamp duty for second homes – because that will help tackle the housing crisis, put a dent in PRS initiatives.



So yet again the property industry plugs a gapping whole in Osborne’s finances – yet he’s still praised for helping recover the economy? Some would beg to differ. As coupled with this hard cash impact there is Brexit which is causing uncertainty in the marketplace and will do until a resolution is reached – either we’re in or we start the 3 year process of exiting – more uncertainy. Shouldn’t we be feeling positive in the market at the moment? Can’t think why we’re not!



The decisions taken was a blow to the sector and completely at odd with the direction of travel the Government was taking with the housing sector. This will not end institutional investors in the sector but wil, certainly curb demand and appetite.

Feel free to contact me 0113 288 2276 or lee.a.wilkinson@uk.pwc.com if you wish to discuss this blog or anything relevant to property and construction.

 

Enjoy the weekend

Lee