Budget announcements on tax, pensions and planning that could unlock significant investment in UK real estate have been welcomed by the British Property Federation (BPF).
A big win for the BPF was the announcement of the consultation on the SDLT treatment of the seeding of property authorised investment funds (PAIFs) and the wider SDLT treatment of Tax Transparent Funds. The BPF has dealt extensively with the Treasury on this matter, highlighting how allowing such investment vehicles would be managed in the UK, rather than in a competing jurisdiction like the Channel Islands, will benefit the market, and will stimulate growth in areas of the country outside London.
Another measure likely to unlock growth throughout the UK, also called for by the BPF, was the upcoming review of the General Permitted Development Order that could see a three-tier system to decide the appropriate level of permission. This will free up local authority planning departments to concentrate on the more important parts of the planning process – such as the creation of local plans, the plans around strategic sites, infrastructure and regeneration.
The radical reform to pensions has also been welcomed, as the freedom that will be granted to those spending their pension pots holds great potential for the property industry. Investment in bricks and mortar, either directly or through funds, will boost the industry and help to encourage growth.
Liz Peace, Chief Executive of the British Property Federation, commented:
“Perhaps the most fundamental reform in the Budget that could impact on UK real estate is not an obvious one and will only occur over the long-term, but the radical reforms to pensions, particularly allowing people greater say over how their pension pot is spent, could have some impact on existing property-based annuity investments, but also create new opportunities for property-based investment products.
“While we are pleased to see that the changes made to the tax and planning system are making the market amenable for investment and growth. We would also sound a note of caution, as policies such as capital gains tax for foreign property investors still run the risk of undoing the good work, and causing the UK market to lose its competitive edge.”