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News Release

London

JLL responds to today's 2017 Budget


JLL directors comment on today's Autumn Budget:

On infrastructure
Jon Neale, head of UK Research, JLL, says: ““The Budget reveals that the government is starting to put in place measures that recognise that, after Brexit, Britain will need to invest more heavily in infrastructure, skills and R&D. It is also clear that this will increasingly be done through city-regions.  The £1.7bn fund for transport city-regions – with half earmarked for those with mayors – will help open up areas of cities such as Birmingham, Manchester and Bristol for new investment. Likewise, the commitment to increasing R&D spending will go some way to helping to improve the UK’s poor productivity levels outside London. The investment in 5G and fibre broadband is particularly welcome in this regard.  Within the housing announcements, there were signs that the government may put in place an improved regime to capture land value uplifts for new developments – which could provide even more of the infrastructure that could unlock housing sites.”

Business Rates
Commenting on the Chancellor’s announcement at today’s Budget that he will bring forward the alignment of business rates and the CPI, previously scheduled for 2020 by two years, Tim Beattie, Head of Rating, JLL UK, said: “The Chancellor has listened to industry concerns that much is clear but in spite of bringing it forward to 2018, we will still see bills increase by 3 percent next spring instead of 3.9percent. Hammond could perhaps have been more generous to really help ease the pressure on businesses, particularly retailers but in times like these, a small reduction is better than nothing at all.”

Beattie continues: “The announcement that business rates revaluations will now be every three years, after the next revaluation, is an important step towards increasing fairness in the rating system, which JLL welcomes. However, the real surprise was the commitment to reverse the so called “staircase” tax, a decision from the UK Supreme Court, which as the Chancellor stated, will require the support of the opposition benches to implement. This is an inspiring move that will allow business to look forward to their rates assessments being restored and predated. However, we would need to ensure that we don’t end up with a result where the unit of assessment is defined by whether the ratepayer decides to implement the changes resulting in different rules applying for different situations.”

Electric Vehicles
"The announcement by the chancellor of an extra £400m into a charging infrastructure fund is welcome news. Hopefully this will allow local authorities access to much need grants to improve their current infrastructure provision which largely lags behind that of the private sector", says Paul Gallagher, car park consultant, JLL​.

Construction

Simon Latson, national director, Building Consultancy JLL, says: “'The announcement of a £44bn investment programme to aid the construction of 300,000 homes by the mid 2020's is welcome, as is the recognition that support is required for construction skills, innovation and training to be able to deliver them.  Whilst the Chancellor spent some time talking about investment in tech businesses there was a disappointing lack of recognition of the investment in modernisation and tech revolution required in the construction industry to achieve the step change in delivery hoped for.  On the whole a set of positive announcements, with Stamp Duty Land Tax for first time buyers grabbing the headlines, but the devil as always will be in the detail.”

Housing announcements:

In response to the Chancellor’s housing announcements, Adam Challis, head of residential research, JLL comments:
300,000 Homes Target
"This Government has recognised that empty housing targets will no longer wash with the voting public.
"300,000 homes per year is very ambitious, but delivery volumes are up by 74% since 2013. At this rate Government could achieve its target by 2020, in time for the next general election.
"However, there is a looming labour crisis that will undermine this target if it is not addressed. The shortfall of workers means a modernisation towards digital construction techniques is badly needed. Modular construction can also make an important contribution to quality improvements alongside higher volumes, crucial to restoring public confidence in the industry.
"Delivery growth rates have been impressive. But as Grenfell reminds us, supply volumes can't come at the expense of quality.”

Loan Guarantees
"Government is offering a game-changing level of support for the sector through capital funding and loan guarantees. £44 billion will trigger a wave of new investment from the private sector to drive supply.”
"The HCA has re-positioned as a more proactive Government department and this investment is a smart way to balance fiscal prudence with providing real value for the industry.
"The SME community needs a hand up, not a handout. At the same time, Government has recognised that building new homes is not a level playing field. In order to get more small developers building, it is providing a lot of direct support that will reduce risks for this group.
"Housing delivery from SMEs more than halved in the global recession and has struggled to recover ever since. Today's announcement will make this group far more competitive in the land market and will increase the pace of delivery."

Planning Reform
"Use it or lose it' planning pressures will not support housing supply. There is little evidence of land banking, and these rules will force housebuilders to hold fewer sites on their own books.
“A greater use of option agreements and land promotion has the potential to create upward pressure on land prices, ultimately feeding through to sales prices.
"A genuine debate on development in appropriate greenfield locations is long overdue. Government should focus on locations where local infrastructure can support new development, or where it can provide this investment to enhance the quality of public services in local communities.
"A new wave of urban extensions is a necessary part of the mix in delivering the UK's housing ambitions.”

Stamp Duty
“A stamp duty holiday for first time buyers up to the capital value of £300,000 will make only a modest difference to demand and do little to support those struggling to buy, especially in the Capital where the average house price is £481,556. To put into context, SDLT liability starts at £125,000 and the average UK first time buyer stamp duty tax is only £1,654 but the deposit requirement is closer to £35,000, a much bigger challenge to overcome. However this will cost the Treasury less than £1 billion per annum, a relatively low cost and wildly popular initiative.”

Capital value SDLT saving
£250,000 £2,500
£300,000 £5000

Tax on empty Homes
"100% council tax premium empty homes is right and should be widely supported. With the shortage of homes available there is no excuse for properties being deliberately left unoccupied."

Housing First
"Housing First is a successful programme in Finland and is gathering support across Europe. Today's announcement is welcome news to deal with the rapid rise in people in temporary accommodation and rough sleeping.”

Crossrail 2
"Crossrail 2 will be a vital piece of new infrastructure for London, but perhaps more important is the opportunity to connect new communities in Hertfordshire and Essex to Central London. It will also create the opportunity for new density across London.
"5 new towns, with emphasis on the new infrastructure investment in the corridor between Oxford and Cambridge, shows Government is poised to make radical long-term decisions to link housing, infrastructure and employment in the new digital revolution.”

Digital Construction
"We would like to see Government look at more meaningful ways to support modernisation of the construction sector. In particular, this includes the off-site construction supply chain, which will need to grow dramatically to meet Government housing delivery targets.
"Capacity is a serious issue, but businesses can't invest without clear and consistent demand from housebuilders. Government can use its land and planning powers to create a pipeline of demand for off-site housing that will kick start a new generation of high quality, precision-manufactured housing.
"Factory-built housing is also a fantastic way for the housebuilding industry to make a positive contribution to the post-Brexit economy. There is no reason why the UK can't become a world leader in off-site construction technologies and export our housing products across Europe and beyond."