On Friday, the new prime minister's even newer Chancellor of the Exchequer, Kwasi Kwarteng, will unveil a mini Budget. So what can real estate expect from Liz Truss's government in its first major fiscal intervention?
Plenty has been leaked this week to the national press with this "mini" or "emergency" Budget already shaping up to have more of interest for the property industry than recent examples. Kwarteng will stand up in front of the House of Commons and set out the government's financial agenda.
Investment Zones
Perhaps most significantly, Kwarteng is expected to confirm the creation of 12 low-tax, low-regulation investment zones across England.
The zones will see planning regulations relaxed and taxes cut to encourage investment at expected locations in the West Midlands, the Thames Estuary, the Tees Valley, West Yorkshire and Norfolk that both extend and sit alongside what is on offer in the previous government's flagship Freeports.
The zones, which Truss spoke about on the campaign trail, will see taxes lowered for residents and businesses, and environmental protections lessened for new developments in a bid to turbocharge housebuilding and infrastructure investment.
In a column written today for CoStar News, Irwin Mitchell planning partner Nicola Gooch says each will likely include a central region, where regulations and planning rules will be eased to encourage industrial, commercial and residential development, and a periphery where planning rules will be streamlined for housing.
The government is initially expected to focus on England, but it is understood that Truss wants to introduce the investment zones in Scotland, Wales and Northern Ireland.
Gooch suggests they sound very much like a "souped up" version of Enterprise Zones which were re-introduced in 2011 and which provided businesses with financial incentives to relocate, such as business rates discounts or enhanced capital allowances for the purchase of machinery and equipment.
Gooch writes Enterprise Zones have been a major disappointment and adds that government would be better focused on improving the planning system, and understanding it. In this area Truss has form.
On the campaign trail she said she plans to scrap national housebuilding targets. While the Johnson government had committed to building 300,000 new homes by the mid-2020s Truss wants to “rip up the red tape that is holding back housebuilding” by abandoning this.
Councils will instead get to choose how many new homes their communities need. A Truss administration would “work with local communities to identify sites ripe for redevelopment and reduce planning restrictions", her team has said, "turbocharging commercial and residential development”.
The industry will be keeping an eye out for announcements in all of these areas on Friday.
The British Property Federation, representing the real estate sector, has been lobbying government to introduce so-called Town Centre Investment Zone, or areas within which local stakeholders gain new policy powers and incentives to enhance investment viability, drive through rapid high-street change and allow access to economies of scale.
The BPF says that before getting access to new powers or incentives, however, local stakeholders must have in place a partnership model that aligns interests. This partnership should be orientated towards delivery of a dedicated plan for high-street regeneration.
Alongside planning flexibility measures, the BPF advocates a range of tax incentives including a 50% discount for occupiers from business rates, an exemption from empty business rates for property owners and an 100% retention of business rates revenue for the local authority.
Business Rates
And so to the industry's real bete noire – business rates.
Altus points out that £2.67 billion of business rates discounts in England for occupied retail, leisure and hospitality premises during the 2022-23 fiscal year are set to end on 31 March 2023 ahead of next year’s revaluation, and says a key question will be whether this scheme is extended.
The industry more than anything wants government to freeze the business rates multiplier for the next financial year and would like it to pass on the expected reductions in bills following the next revaluation in April immediately, rather than phasing them in slowly over the three years of the new list happened before.
Experts at Altus describe it as "unthinkable" that a pro-business new Prime Minister in Liz Truss will not move quickly to mitigate the giant looming increase in business rates. It says there are strong rumours that the government will raise the small business rates relief thresholds in England from £15,000 to £25,000.
But while Kwarteng is expected to make major interventions on supporting businesses and on taxation elsewhere, will the big issues around business rates be kicked into the long grass again?
Energy
The government has already today (21 September) announced its Government Energy Bill Relief Scheme that will provide support for businesses on energy bills.
Melanie Leech, chief executive at the British Property Federation, said in this case the government has delivered on its promise to act quickly to provide support to businesses across the UK facing crippling energy price rises.
But she says vulnerable sectors will need further targeted support and the Business Secretary, Jacob Rees-Mogg, must continue to look at all options, including measures to reduce the unsustainable burden of business rates.
"Now is the time to freeze the business rates multiplier for the next financial year to avoid significant inflationary uplifts and make sure that businesses whose rates are being reduced because of the last revaluation get the benefit of this reduction straight away.”
Stamp Duty and Other Taxes
The biggest headline-grabber nationally is likely to be a cut to stamp duty, first suggested in the The Times today.
Truss believes this will encourage economic growth by allowing more people to move.
Kwarteng's fiscal statement is also expected to include plans to reverse the national insurance rise and freeze corporation tax, two measures that The Times estimates will cost £30 billion a year between them.
All of this comes ahead of an expected announcement by the Bank of England tomorrow that it is lifting interest rates by 0.75%, its highest rise in 33 years.