General Election and an unfavourable tax system cited as top concerns for the property and construction industry
Findings of Crowe’s 2019 Property and Construction Outlook report provide a timely snapshot of the UK’s property market.
The property and construction industry has long been an indicator of the health of the UK, New research from national audit, tax, advisory and risk firm, Crowe, has gathered the opinions of the property and construction industry, identifying the key challenges and opportunities the sector faces over the next 12 months.
Gemma Brindley, director in Crowe’s Cheltenham office, said: “It is clear from the results of this year’s survey that the sector is calling for stability in this current political and economic environment.
“With the impending General Election topping the concerns of our respondents (27%), up from 13% in 2018, interestingly Brexit, although still a concern at 20%, has seen a 10% drop from 2018.
“It is interesting that despite these overall concerns, 53% of respondents remain confident and believe that their business will grow in the next 12 months.”
Unsurprisingly, for the third consecutive year, the vast majority of respondents feel that the tax system is unfavourable to property developers and investors (65%), with only 13% believing that it is favourable. 48% of respondents identified stamp duty land tax (SDLT) as the biggest barrier to business growth and 36% stated tax complexity.
This is underpinned by the longstanding calls from the property and construction sector for SDLT to be cut in an attempt to boost activity in the housing market. In addition, 63% stated greenbelt protections are not conducive to the housing market.
A variety of technological factors are affecting the sector, with 52% believing that retail property will be most impacted, up from 32% in 2018. Unsurprisingly, 42% believe that modern methods of construction (MMC) will be the next big thing to set a future trend; reports such as ‘Modernise or Die’ and the 2018 Construction Sector Deal highlight the benefits of MMC and the impact of the government’s over-reliance on traditional build.
The South East is regarded by respondents, once again, as having the highest potential for investment (34%). This is partly due to Crossrail, which has been projected to support the delivery of over 57,000 new houses.
Crowe’s research suggests that the London market, although still affected by low growth, is the second most attractive region for investment in the next 12 months (20%).
In a first for the research, the North West was cited as an area for investment over the next 12 months, with the two major cities of Manchester and Liverpool each having populations exceeding 500,000. The area will also benefit from the £55 million HS2 high-speed rail project, which will enable travel to London in 63 minutes and 94 minutes respectively – a big attraction for developers.
As a major topic nationally, diversity has been identified as an area of focus for the property and construction sector in the report. With only around 14% of the industry consisting of women, it is not surprising that respondents believe diversity in the sector will increase (58%) with calls to attract females at a young age.
Stacy Eden, partner and Head of Property and Construction at Crowe, said: “There have been some interesting results from this year’s survey, notably the increased concern around the political environment.
“The continued concern around SDLT was largely expected, but we welcome the recent noise from political parties, indicating that they may be in favour of reducing levels. The hope now is that they listen to the opinions of the sector and take action, including reducing the level of tax complexity and streamlining the UK’s planning regulations.
“While the UK remains an attractive location for investment, the industry is changing. Businesses face new challenges, with an uncertain political and economic environment, high taxation levels and a restrictive planning system.
“It is strongly recommended that those navigating the industry’s changing landscape seek specialist advice to identify opportunities and challenges, mitigate risks and secure last value for their businesses.”
Key points the survey identified include:
- 27% believe the General Election poses the most concern to their business.
- 65% believe the tax system is unfavourable to property developers.
- 52% feel retail property will be impacted most by technology.
- 58% believe diversity within the sector will increase.
- 53% expect their business to grow in size over the next 12 months.
- 34% regard the South East (excl. London) as having the highest potential for investment.
Ends (709 words)
Miriam Sherwood, Senior Marketing Manager (Regions), Crowe. Tel: 0121 543 1900
Notes to Editors:
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