Budget Commentary – Mansion Tax, Business Rates & Planning Reform
Andrew Teacher, Co-founder at LauderTeacher, one of the UK’s leading advisors on real estate communications, investor relations and a former spokesman for the BPF, comments on the potential Budget.
Mansion tax
“Nobody likes paying tax, but the reality is a council tax revaluation is long overdue. Rather than distorting the market, which is what a mansion tax on homes over £2 million will do, it should be a properly balanced reset of the regime to remove distortions and equalise the tax take across the country.”
“The reality is that in many parts of London, people living in a £2 million house are not living in a mansion. Equally, there will be many people who own multiple dwellings such as holiday homes, homes for their kids or buy-to-lets who are benefiting from lower council tax rates in many parts of the country.”
“That, combined with the decrepit and outdated system of business rates, means council tax is a big earner that simply needs a fundamental reset. Doing anything other than this undermines the opportunity at stake and shows that the government is not willing to do the radical things it needs to.”
Business rates
“Back in 2009 I lobbied for a £2 billion refund in empty property rate relief, which Gordon Brown handed over following a national campaign we waged on behalf of pensioners and listed landlords alike.
Relief for empty properties is just one of a stack of carve-outs that exist within the business rates regime, creating complexity and inefficiency.
The take from business rates has continued to reduce from a peak of around £30 billion in the 2010s, driven by the destruction of the High Street and successive governments’ refusal to properly reset an outdated and inefficient regime.”
“Rather than taxing business failure – which is what business rates often do, creating a tax charge where companies might not be making any profit – there should be a full review and a full reset of the regime.”
“Given the dominance of big members such as Segro, the BPF has been silent on the need to properly spread the load across major warehouse landlords who have enjoyed booming valuations over the last 15 years as the High Street has moved online.
The only way of making the system fair is to equalise this inefficiency. But fundamentally, if we want to start to drive growth then we need to take small independent retailers and leisure operators out of the regime entirely.
This cannot be a carve-out for small local supermarket stores or banks, as has happened in the past. There has to be some incentive for a small florist or fashion designer to make the shift from their front room to the High Street. Unless the government is prepared to do that, it is not just missing a trick but failing on an obvious opportunity to drive growth.”
Planning reforms
“We have had an avalanche of planning announcements over the last year and most reform is welcome. But this is yet another area where the government is simply not using the huge majority it has to effect radical change.”
“Without proper funding for local council planners, a total removal of domestic extensions from the planning system, and a zero rating for development levies in London over the next two years, we are not going to see meaningful growth during this Parliament.
Reducing affordable housing levies is not going to be a popular decision, but policymakers and charities need to understand that right now nothing is getting built at all. This is creating a logjam and affecting the ability of developers and housing associations to get anything off the ground.”
“The housing market is basically in A&E. It needs to be resuscitated and changing the bedsheets is not going to do that.”
“We should be looking at zoning policies that pre-designate planning consent and avoid the continuous back and forth with different agencies, and the predictable debates around height and massing that are still going on.”
“The other elephant in the room remains the Building Safety Regulator and the incoming swathes of regulation brought in by the Renters Reform Act, which the chancellor herself fell foul of recently. Whilst these things are doubtlessly well intentioned, they contradict the government’s growth agenda, undermine the ability of investors to act, and reduce Britain’s competitiveness in what is a truly international marketplace.”
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