When considering the past year, ‘uncertainty’ has certainly been the watchword for those operating in the property and construction industry.
Unsurprisingly, Brexit remains the primary cause of uncertainty for those in the sector. Our recent 2018 Property and Construction report found that the issue of leaving the EU has overtaken the ‘UK economy’ as the biggest concern to businesses in 2018. However, despite this, a significant number said they expect their businesses to grow in size or remain the same in 2019, suggesting they identify opportunities in or despite of Brexit. However, the market is divided on the favoured outcome of Brexit.
Our report also found that for the majority, the UK tax system is unfavourable to the industry. The vast majority say Stamp Duty Land Tax (SDLT) is the biggest tax barrier to business growth, followed by Capital Gains Tax (CGT). This is not surprising seeing as SDLT has significantly reduced liquidity in the market and subsequently slowed the pace of housing developments being built.
Reducing SDLT and reviewing Green Belt protections could result in an improvement in the provision of housing to follow yet another year of low housing builds. This is a viable solution with many feeling the current Green Belt protections are not conducive to solving the housing crisis.
The emergence of technology and its impact on the industry is a trend which is likely to increase as we move into 2019. As the demand for customer experience and personalised services grows, property will continue to be increasingly impacted. Retail and office properties are seen as the most vulnerable to technological trends as a direct result of online shopping and online work platforms reducing the demand for physical premises.
It is likely foreign investment into the UK will be hampered by political and economic uncertainty, particularly with Brexit and the continuous and numerous changes seen to the taxation of real estate for overseas investors and developers. The depreciation in sterling will only partially counteract this effect. If the government can ‘resolve’ Brexit and reduce changes to tax legislation, the UK may strengthen its attractiveness to overseas investors and developers.