Optimism and activity among residential and commercial property developers and investors is on the rise, according to a new survey by accountancy firm Crowe Clark Whitehill. The national survey by the firm, which has offices in Tunbridge Wells and Maidstone, found that 68 per cent of the industry expects to increase the volume of property transactions over the next 12 months. This re-emerging optimism coincides with 50 per cent of those surveyed stating that the availability of funding had improved since the start of 2013, with less than six per cent believing the situation had worsened. While 67 per cent of respondents felt the Coalition Government was following the correct policies for the economy, the confidence of the residential and commercial developers was tempered by a sense that 84 per cent believed the current UK tax system was not conducive to property growth and investors.
Stacy Eden, head of property and construction at Crowe Clark Whitehill, said: “We’ve definitely seen signs of pick up in the market. But unfortunately this isn’t matched by a tax regime designed to stimulate growth in the property and construction sector, which forms 10 per cent of the UK’s GDP.”
Other sectors, such as start-up businesses and technology, have seen generous tax incentives to encourage investment, such as the Enterprise Investment Scheme, introduced in an effort to foster growth. But property industry figures feel that the UK’s property tax regime is acting as a potential barrier to investment.
“There are some adjustments that could be made to the UK tax regime that would help the property sector out of the doldrums. Easing void rates costs, reducing business rates and removing onerous stamp duty on smaller leases would go a long way towards assisting the property market to exit from recession,” added Stacy Eden. “Pressure on the government to act on popular issues such as ‘mansion tax’ has led to what many perceive to be overly burdensome tax regimes imposed on UK property. The UK tax system plays a major role in investment decision-making and some changes to simplify the current tax regime would help to make the UK a much more attractive investment destination.”
The Crowe Clark Whitehill survey, which asked property developers and investors across the country for their views on the state of the market in 2013, painted a positive picture, with 55 per cent saying they think values will rise over the next 12 months. The survey’s findings correlate with data from the Hometrack monthly survey which shows that South East prices rose by 0.5 per cent in August. The upward trend in house prices is expected to continue with a 1.1 per cent increase in demand outpacing a 0.8 per cent rise in supply across the region.
Simon Crookston, Director of Taxation at Crowe Clark Whitehill said: “The South East and London are once again leading the way in terms of activity. The recently introduced Help to Buy scheme, under which buyers of newly built homes with values up to £600,000 are eligible for a government loan worth 20 per cent of the price, on which they pay no interest for five years, is also generating activity in the residential market place. With the general economic position improving, and historically low interest rates, we can expect growing interest from investors in the commercial property market, which would be stimulated further if the government made favourable changes to simplify and improve the tax regime on property.”