The Autumn Statement by UK chancellor Jeremy Hunt that foresees an update of business rates will restore balance in the retail market for both landlords and tenants and provide a substantial boost for the retail sector, according to CBRE.
The head of UK research at CBRE Advisory Services, Jen Siebrits said that the UK’s autumn budget will ‘strike the balance between reducing inflation and the national debt, without deepening the looming recession’.
She welcomed the chancellor’s decision to increase the R&D budget by £20 bn (€23 bn), highlighting that venture capital investment in life sciences has more than doubled, while the number of companies is up by around 20%.
CBRE expects that Hunt’s decision to reduce the capital gains tax allowance from £12,300 (€14,123) to £3,000 (€3,444) from April 2024 might encourage buy-to-let landlords to sell sooner.
At the same time, it forecasts that the 7% affordable rent cap will provide housing associations more capacity, although it remains to be seen whether renters can afford the rise.
Tim Attridge, head of UK ratings, CBRE Advisory Services said: ‘The Chancellor has thrown the High Street a lifeline. He confirmed in his Autumn Statement that the revaluation will proceed in April 2023. The expected reductions in the business rates tax of 30-60% will be realised in full across the retail sector as he has removed the caps which previously prevented this. He has also stated that inflation will not impact the multiplier used to calculate the tax. Quite possibly the best news for retail and indeed all struggling businesses for some considerable time.’
Scott Murdoch, chairman of UK retail at CBRE Advisory Services added: ‘This is the most significant rating moment I can recall in my career. Rates payable have been out of sync with rents for some time, creating issues which have led and contributed toward some significant structural change amongst many retailers. A rate reduction of this scale now allows for harmonisation in the retail market on both the landlord and tenant side and furthermore, allows for consequential savings across the industry.’
