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News Release

London

General 2013 Budget house view from Jones Lang LaSalle


​London,  20th March 2013 -  Commenting on today’s 2013 Budget, Jon Neale, Head of Research UK at Jones Lang LaSalle, said: “While the budget was relatively low-key, there are some snippets of good news, particularly for the residential sector and the regions. Firstly, the Government confirmed that capital spending will be increased by £3bn per year, most of which will be channelled into infrastructure. This will hopefully translate into rail, road and rapid transit schemes – as well as energy-related projects – that could have a very positive impact on regional property markets.”

Jon Neale continued: “Secondly, George Osborne confirmed that he is to action the majority of Michael Heseltine’s growth report, which suggests devolving more powers to city-regions to promote their own economic growth. The pilot area of Birmingham & Solihull will be the first to benefit, but this will be rolled out to the other major cities.”

“Finally, the extension of shared equity purchase schemes and mortgage guarantees, as well as the additional support for the development of an institutional private rented sector, are all potential boosts to the residential development sector. It remains to be seen whether these initiatives, which had a slow start in early incarnations, will have more significant effects given their larger budgets and reach.”

Adam Challis, Head of Residential Research at Jones Lang LaSalle added: “Institutions have been held back from direct investment in residential assets by a lack of suitable options. Today’s Budget offers a potential solution, with the planned five-fold expansion of the Build to Let fund up to £1 billion. This  is a welcome move by the Treasury, mindful of ‘backing a winner’ in advance of 2015.”

Adam Challis continued: “Institutions have been held back from direct investment in residential assets by a lack of suitable options. Today’s Budget offers a potential solution, with the planned five-fold expansion of the Build to Let fund up to £1 billion. This  is a welcome move by the Treasury, mindful of ‘backing a winner’ in advance of 2015. “A lack of investment-grade residential stock is forcing many investors to look at indirect opportunities. This is forcing some to invest in operating businesses such as housebuilders and estate agencies to gain exposure to the residential market.  “Today’s announcement offers a genuine solution to the logjam of Build to Let supply. Government needs to see genuine results and this programme has broad support from developers and their funders.”

“The success of Build to Let now rests on adoption of the Montague Review recommendations related to a planning system that can be flexible to the viability of Build to Let schemes. This includes tackling the thorny issue of affordable housing requirements head-on.”

Commenting on the Government’s confirmation that it will begin a consultation process on conversion of Retail to Residential, James Brown, Head of Retail Research at Jones Lang LaSalle, said: “We need more flexibility to react to the structural change that is playing out across our retail landscape.  Conversion of retail that is surplus to requirements to residential, not only deals with obsolescence, but would bring people back into the heart of some of our town centres. The pace of change in retail is fast and the planning process needs to catch up, to prevent some town centres from getting left behind.”

Jeff Field, Chairman of Planning and Development at Jones Lang LaSalle, said: “Proposals to simplify the planning system are normally welcomed but we will need to see the detail. Knee-jerked reactions when you are up against it are never a good idea. Making finance more easily available for developers and individuals will help with planning deliverability.”

Jeff Field concluded: “The system should look carefully at producing a new residential rented tenure as a land use category.”