Robert Twigg, Partner
Commercial Property
In a word, no. Or, at least, not for a while. But Mr Darling was never going to please everyone.
It’s just a pity we didn’t see a better range of incentives and relief for a market which, sadly, remains very depressed. Take Stamp Duty. Yes, the tax holiday on properties from £125,000 to £175,000 has been extended for three months to December 09 and this could well mean we see more first time buyers. But what about when the holiday draws to an end? Will the market have recovered sufficiently by then as not to need this concession or will we revert to a stalled market with dashed hopes of rejuvenation? Much will depend on the extent to which banks have started lending again at that point.
Changes to allow Stamp Duty to be paid in instalments would have been useful. And measures to encourage larger scale investment in residential property, along the lines lobbied for by the British Property Federation could have made transactions far more feasible for investors. At the moment it’s likely that any bulk purchase will attract SDLT at 4%, because it is assessed on the whole price rather than the value of each property. If bulk purchases of residential property were taxed according to the value of the individual properties, larger investors in this sector would benefit from the lower rates payable by smaller scale investors.
Owners of empty commercial properties could have done with a break too. Whilst businesses will be able to defer payment of 60% of the increase in their 2009/10 business rates bill, nothing has been done about deferring payment in respect of empty properties. The abolition of this relief continues to hit these owners very hard.
Real Estate Investment Trusts (a tax-saving tool for property lettings businesses) haven’t really progressed under the budget and it’s disappointing to see that residential REITs – a potential new form – weren’t mentioned at all. The new charge on developments – the Community Infrastructure Levy – has been delayed until 6 April 2010 but unfortunately still looks set to be another impediment for developers.
I am loathe to join the ranks of the pundits who are constantly talking down the economy in general and the property market in particular. So I am determined to end on a positive note. It is arguable that the extra funding given to the banks in the autumn has not yet had time to filter down and it is certainly too early for the quantitative easing measures introduced earlier this year to start working. If these measures do have the desired effect and get the banks lending again, we can hopefully look forward to an increase in property transactions.
For further information please contact Robert Twigg T: 029 2047 4410 E: r.twigg@capitallaw.co.uk
