Institutional and individual Investors are investing in multi-use buildings and moving away from buy-to-let as a result of the punitive tax regime against landlords, according to leading estate agents Winkworth.
Adam Stackhouse, head of development and commercial investment at Winkworth, reveals in the latest episode of its Property Exchange podcast on the outlook for commercial property, that people are starting to reject the buy-to-let residential model. He said: “That’s partly down to the taxation structure in this country. With multi-use buildings, entry costs are lower with a reduced rate of stamp duty. They are very tax efficient during ownership and it’s a lower level of capital gains when you look to sell the property. There are also inheritance tax benefits as well.”
With a new Government in place next month, Winkworth’s Chief Executive, Dominic Agace, tells the podcast that he would like to see a reduction in business rates. He said: “It seems odd that businesses are incentivised not to have a high street presence. We want to encourage local communities, independent shop owners, and small businesses. They create pleasant environments, which is good for everyone, and we should be supporting them. Expensive business rates deters people from setting up on the high street, which is a shame.”
The VAT rating on buildings under construction also needs to be reviewed to speed up regeneration and the conversion into multi-use buildings with retail, office and residential, which is the only way to make these projects viable, suggests Adam Stackhouse. He tells the podcast: “We need to see the 5 per cent VAT rating extended beyond listed and heritage buildings and applied to a regeneration/benefit to the community type assessment model. Reduced VAT levels may harm the government in the short term but it would speed up the creation of these hybrid buildings and bring renewed energy to city centres.”
