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Commercial

It is impossible to talk about the year ahead in the commercial arena without confronting the impact of the general election.

At this point in time we cannot even tell how many political parties will be in power in six months time, let alone who they might be.

What we are better placed to speculate on, however, is whether such a high degree of political uncertainty is likely to lead to a slowdown in activity in the commercial property market, much like we saw in the months before the Scottish referendum.

Although we might not see such a huge dip as Scotland did, with the value of commercial property sales falling from £841m in Q1 to £592m Q2, until the outcome is confirmed, we could see a drop. 

Government uncertainty

When the waters do settle, it is likely that the Commercial Real Estate lending market will remain strong, with banks continuing to reduce their loan books and further diversification of lenders, as the De Montfort Commercial Property Lending Report has shown to have happened over the past six months.

The BPF has its fingers crossed that one thing that the government will deliver before May will be the secondary legislation for the Minimum Energy Efficiency Standards.

The industry needs clarity if it is to meet the required minimum standards by 2018, and the sooner this detail is provided, the better.

“Top of our wish list for commercial real estate market for the coming year is for government to take a deep breath and commit to a full review of business rates”

But perhaps top of our wish list for the commercial real estate market for the coming year is for government to take a deep breath and commit to a full review of business rates.

There will be a myriad of opportunities for this over the next 18 months.

Following chancellor George Osborne’s commitment to a ‘review’ of the rates in the Autumn Statement, it is hoped that politicians might be galvanised to take further action.

New system

As outlined in our recent report, Better Rates for Better Businesses, a constructive first step would be to move to a system of annual revaluations.

This would create a more responsive tax system that is fairer to ratepayers and that does not discourage business investment in struggling towns and cities.

Whatever colour the next government, May will offer a fresh start for policy-making, and there will be a lot to get our teeth stuck into over the coming year.

Ian Fletcher is director of policy at the British Property Federation

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