There was little detail in the Budget to cheer the region’s property sector although many felt that more favourable economic conditions would undoubtedly revitalise both the commercial and residential markets.
Adrian Aston, a director at Wakemans, said it was a case of wait and see for the extent of the cuts in public spending.
He said: “The industry was expecting deep cuts in public spending and this is what has been delivered, a 25 per cent reduction in public spending but no detail yet means that the construction and property industry will have to wait until October 20 to know more about where the cuts will fall.”
Rory Daly, managing director of Birmingham-based chartered surveyors and auctioneers Bigwood, praised the Chancellor for putting the emphasis on spending cuts rather than tax hikes.
“With Capital Gains Tax not going up as much as had been expected, it was good in so much that it will keep some life in the property market.”
Birmingham-based Daniel Hartland, tax partner at Grant Thornton and a construction sector specialist, felt some of the proposals would undoubtedly worry the construction sector.
“The tax and VAT hike announced today will add to the distress of an already fragile recovery in the construction sector,” he said. “As consumers now face an increase to their tax bill and a rise in VAT, this will undoubtedly lead to a fall in the confidence they need to make larger scale purchases. Many will question if now is the right time to buy, if they have the funds to do so and if their jobs are secure.”
Estate agent Andrew Grant was upbeat about the Budget. He said: “The government’s decision to cut the deficit will have positive effect on business and investor confidence. This in turn will incline more people to remain employed than would otherwise have been the case. Property market activity levels are affected by the unemployment figures – generally slowing as unemployment rises.”
Jonathan Bengough, from Knight Frank, added: “This is a savings budget in the main and not generally a punishment on people through onerous high taxes. This budget will have no significant effect on the property market in the Midlands. This market is more about the availability of cash and loans and it is banks and lenders that we look to, to keep the property wheels moving. We remain in a market which is realistic, but there remain encouraging signs of serious buyers out there for sellers wanting and willing to move on.”
Terry Corns of Lambert Smith Hampton’s Birmingham office felt even the modest increase in CGT could be damaging.
He said: “The industry will be relieved that capital gains tax (CGT) has not risen to 40 per cent as feared, however, the new 28 per cent rate for high income earners is still likely to deter potential new investors in the private rented sector. There are still concerns that the higher rate could squeeze UK property investors out, as foreign investors take advantage of the favourable exchange rates to gather high rates of return.”
Richard Goodall, King Sturge’s head of investment in Birmingham, believes the budget will actually help restore investor confidence in Britain.
“In a way, the previous weeks of spin have helped, because there were so many leaks about what might happen, that when they didn’t – a rise to 40 per cent CGT especially – there has been a sense of relief,” he said. “Major decisions had to be taken to reduce the deficit, which is always a bit of a gamble, politically and economically, but I think overall, the balance was about right.”
Philip McArthur, director in strategic consultancy at Drivers Jonas Deloitte, said: “Not much was announced that would appear to directly affect the mainstream property market but the statement that there would not be any reduction in capital spending totals in the Budget was unexpected. It is clear that those public projects seeking funding will be subjected to closer scrutiny with any available funding being directed to those projects delivering a significant economic return to the country. This appears to be consistent with the earlier Government indications that it would seek to continue investing in regeneration projects.”