Market Insight

Spring Budget: Key outcomes affecting occupiers, landlords and investors

The Spring Budget 2024 is, according to the OBR, expected to reduce inflation in 2024/25.
March 7, 2024
The government expects the announcements to bring the equivalent of over 100,000 people into the workforce by 2028-29 and the OBR expects the economy to grow by 0.2%. But what are the main announcements that will affect our occupier, landlord and investor clients?

Long Term Plan for towns welcomed

In addition to the through the Levelling Up Fund that has so far awarded £4.8 billion to support town centre regeneration so far, the government has also committed to spreading more investment across the country, with hundreds of millions in funding to extend the Long Term Plans for Towns to 20 new places in what is a welcome move.

The Long Term Plan for Towns is a core part of the government’s levelling up programme that has so far invested more than £13 billion to support projects in a variety of places.

Announced at the end of 2023, the government announced that it would invest £1.1 billion in 55 towns, giving them the tools they need to help build a better future for their local people.

This will be done through initiatives including the creation of Town Boards, a £20 million endowment-style funding to catalyse private investment to create new jobs and breathe new life into our high streets and town centres.

Business Rates: Action on avoidance and evasion

The government has published a summary of responses to the Business Rates Avoidance and Evasion Consultation which was launched to test reforms to the Empty Property Relief to help close down known avoidance practices and gather further information on wider avoidance or evasion risks.

As announced in the Spring Budget by the Chancellor, the Empty Property Relief “reset period” will be extended from six weeks to thirteen weeks from 1 April 2024 in England.

This is designed to disincentivise “box shifting” where some landlords repeatedly occupy properties for short periods of time in order to claim further Empty Property Relief.

The government will also consult on a “General Anti-Avoidance Rule” for business rates in England which would provide greater flexibility for the government to tackle emerging avoidance schemes as they materialise.

Tax relief to fuel creative and film industry

New tax breaks and investment backed by over £1 billion, will help to establish the UK as a world-leader in high-growth industries, according to the Chancellor.

In what will be a further boost for the thriving film studio and production sector in the Thames Valley, the Chancellor announced that eligible film studios in England will receive a 40% reduction on gross business rates bills until 2034.

The relief will be implemented as soon as possible, and bills will be backdated to 1 April 2024. This represents a tax cut worth around £470 million over the next 10 years, according to government. The devil will be in the detail, however, with the term ‘eligible film studios’ a vague reference at this stage.

Meanwhile, there will also be higher tax reliefs to lower the cost of producing visual effects in high-end TV and film and a new tax credit for independent British films with a budget of less than £15 million.

Boost for landlords with Capital Gains Tax (CGT) cut

The Chancellor also unveiled a cut to CGT on property, stating that the higher rate of property capital gains tax would be reduced from 28% to 24%.

The announcement is expected to ‘fire up’ the residential property market and support thousands of jobs that rely on it, according to the Treasury.

Investment in medical research which could indirectly boost Oxford market

A £360 million package will support innovative R&D and manufacturing projects across the life sciences, automotive and aerospace sectors.

Mr Hunt announced new investments in key growth sectors, including life sciences, with a £45 million investment to fund medical research to develop new medicines for diseases like cancer, dementia and epilepsy.

This could indirectly boost the market in Oxford, which is home to many of the UK’s most innovative businesses in the life sciences sector, as Mike Watson, Partner based in Oxford, adds:

“It is heartening to see that the government recognises the importance of the UK Life Sciences sector and that knowledge workers are the engine room of the economy going forwards. The package announced today, is certainly welcome and shows positive acknowledgement of that.”

London to receive surprise housing investment

Over £240 million to build nearly 8,000 homes in Barking Riverside and Canary Wharf alongside a new life sciences hub.

Critics are already arguing that the Levelling up Funds which are aimed at addressing economic disparities, have not been allocated in the right place, meanwhile supporters have promoted the need for new housing in the capital to combat the national housing crisis.

Focus on incentivising investment in renewable energy lacking

Whilst the windfall tax or Energy Profits Levy has been extended until 2029, many of the previous announcements regarding additional funds to the Green industries Growth accelerator, and further investment in small nuclear reactors, as well as hydrogen production, design of carbon capture and increased speed of grid connections, are all still a long way off.

The Budget was missing further incentivisation or investment in rewarding the installation of renewable energy sources such as solar PV cells which was disappointing.

The CBI had also been pressing the Chancellor for a more detailed Net-Zero investment plan to feed into the updating of the Industrial Strategy, however there was also no mention of this in the Budget.