The Real Issues

The Real Issues – Pre-Budget Report Special

Welcome to the 2009 Pre-Budget Report edition of The Real Issues.

In this edition we review the Chancellor’s key proposals and consider their potential impact upon real estate investors, developers and occupiers.

With a backdrop of deteriorating public finances and the UK holding the dubious honour of being the only G20 nation with an economy still in recession, the Chancellor found himself in a particularly unenviable position and one which afforded limited room for manoeuvre. 

Alistair Darling faced two options: if he used the Pre-Budget Report to cut Government borrowing then this would delay any economic recovery; if he were to loosen fiscal conditions then this would have an adverse impact upon the stock market and the UK’s credit rating.  In the end the Chancellor delivered, dare we say it, a rather bland Pre-Budget Report but one, given the prospect of an election no later than 6 May, with strong political overtones.

For the real estate industry there were, mercifully, few surprises – good or bad.  The principal measures of interest were: - 

• Confirmation that the rate of VAT will return to 17.5 per cent from 1 January 2010

• An end to the stamp duty land tax (SDLT) holiday for properties valued below £175,000.

• Technical clarification to aspects of the Worldwide Debt Cap which will apply to accounting periods of large companies beginning on or after 1 January 2010.

• An increase of the threshold for Empty Property Relief (from a rateable value of £15,000 to £18,000) together with an extension of the relief to 2010/2011.

Rather surprisingly, no further announcements were made by the Chancellor in relation to the REIT regime and it is difficult to envisiage an expansion of this sector without a significant loosening of the applicable legislative framework.  

The following other changes were announced (click on the links below to read the full article):

• Boosting the property industry
• Overseas issues
• Anti-avoidance measures
• Brown goes green
• Employment taxation changes
• Other legislative changes

We trust that you will find our commentary interesting.  For further information please do not hesitate to contact either your usual BDO adviser or Solly Benaim