Prior to the Budget being announced property landlords, tenants and surveyors in London were hoping that both the Stamp Duty and Business Rates taxes would be addressed. London has taken a significant hit in both accounts, as a high number of properties are subject to high Stamp Duty charges, and commercial property across the board is subject to severe Business Rates increases in April. The question was how would the Chancellor address these issues in the Spring Budget?
The Business Rate revaluations in April have hit London to extreme levels, even after accounting for any form of relief. Some businesses could potentially see a 45% increase in rates payable in 2017 alone, so unsurprisingly many are concerned that such dramatic tax increases could result in companies facing insolvency. To make things worse if one wished to challenge their Rateable Value with Valuation Office the appeal process has been adjusted in a manner so that it could take 2-3 years before reaching a Valuation Tribunal, and even then, things will not be adjusted unless there is a ‘glaring’ error! In simple terms if you feel that your property has been over valued and you are now paying an excessive level of tax, it is going to be a long drawn-out process, with a limited chance of success.
As there is a level of economic uncertainty, many surveyors in London expected the Chancellor to address the problem in order to protect the many companies and organisations throughout London.
Sadly however this appears not to be the case, apart from a number of pubs that could see a £1,000 reduction, little support has been provided for the rest of the occupiers of any commercial property.
The Chancellor did accept the rating system needed to be addressed and reviewed before the next revaluation in 2022. This however, provides no support to the many that are being affected by the sudden increases this time round.
When George Osborne made amendments to Stamp Duty, putting additional surcharges on buy-to-let and second homes, the number of transactions in the London property market slowed down almost immediately. Many Estate Agents in London thought that a Budget coming from a new Chancellor would automatically see a change in Stamp Duty, even if only slightly, just to get London sales market running again. It turns out the Chancellor disagrees for now, therefore the London property market won’t get the boost everyone was hoping for.
Overall the Spring Budget was disappointing regarding property market. Property surveyors are now hoping that the Chancellor sees things differently in August 2017 to give London a boost that it needs and protects the companies that have been hit badly by the upcoming Business Rate hikes.