Heather Powell: Head of Property and Construction
Commercial Rates Reform
Proper reform is needed of the commercial rates system so that a fair tax is raised from occupiers of commercial properties (shops, factories, offices, warehouses, and logistic centres) that reflects the profit an occupier can earn from the property. The Government has consulted on this for many years and should now introduce a new system that adjusts mismatches such as the position for some retailers where the rates liability is greater than the rent payable. Reform will help reinvigorate our high streets and town centres, bringing life back to areas hit hard by the pandemic.
The Labour suggestion of increasing the small business threshold to £25,000 is just tinkering – the Government has consulted on this for many years and needs to introduce a new system that adjusts mismatches such as the position for some retailers where the rates liability is greater than the rent payable.
Energy-Efficient Homes – Almost 40% of UK homes are rented
The Government needs to ensure that landlords improve the energy efficiency of these home if the UK is to be carbon zero by 2050. While the funding may not be available to make grants to landlords, a reduction of VAT to 0% (from 20%) on any works to improve the energy efficiency of a home (which can be easily measured by filing of EPC certificates pre and post the works) for a certain timespan (say three years from April 2022) will encourage landlords to get on with the work. It would also reduce carbon emissions from these properties, as well as reducing energy bills for tenants. A ‘win-win’ for the Government that they can now enact as they are not trapped by the EU legislation governing VAT.
Energy-Efficient Commercial Buildings
The Government needs to set out a clear road map for increasing standards re energy efficiency for offices, logistic centres, shops, etc. so that landlords know what needs to be done by when to enable them to continue letting their properties. This will ensure that energy inefficient buildings are refurbished, or replaced, assisting in achieving the carbon zero target, and generating work in the UK – another a ‘win-win’ for the Government.
Sean Randall: Stamp Duty Partner
We could potentially see the reintroduction of relief for zero-carbon homes which would result in full Stamp Duty relief for such homes.
The Chancellor may also introduce an indirect charge on sales of land-rich companies – probably limited to companies owning dwellings only, as exists in Scotland.
Another potential change could be the abolition of the ‘mixed-use’ rule – or at least a change taxing the residential element of the price with the 3% surcharge again, as happens in Scotland.
Finally, we could see changes to various punitive Stamp Duty rules that inadvertently apply to new private shared ownership schemes, including WayHome – as reported in The Times.
David Hough: Partner
This Budget could see the introduction of the already-announced grants for heat pumps in an effort to incentivise energy-efficient works to residential property.
We could also see the introduction of Government funds for solar panels to help achieve Carbon Zero by 2050.
This would include:
- The introduction of a Government-funded loan scheme to enable homeowners to buy solar panels without using their own cash
- Repayments to be made from the proceeds of the sale of electricity back to the grid (automatic diversion to Government, so limited costs of collection or risk to the Government)
- When loan and interest repaid electricity sale proceeds go to the homeowner
- If property is sold, the new owner inherits asset and liability for loan.
Would you like to know more?
If you would like to discuss the above or how it may affect you and your business, please get in touch with your usual Blick Rothenberg contact or one of our experts whose details are listed on this page.
For press enquiries, please contact David Barzilay using the details on this page.
For more information and predictions please visit our Autumn Budget 2021 hub.