BCSC: Budget must deliver on pro-growth agenda
Retail property industry body BCSC is calling on Government to make a firm commitment to measures to kick-start the retail property development pipeline and reduce the tax burden on empty property in its Budget next week. BCSC has outlined a number of key recommendations, supported by a research paper in partnership with retail property agency Lunson Mitchenall.
In his letter to the Chancellor, Richard Akers, President of BCSC, sets out the priorities that need to be urgently addressed in the Budget - due on 23 March – if retail development is to continue to deliver economic and social benefits to communities across the UK.
The organisation is urging Government to commit to:
• the introduction of the Local Tax Re-investment Programme (LTRIP) form of Tax Increment Financing (TIF). Unlike other TIF proposals, LTRIP transfers risk to the private sector for upfront investment without relying on the public sector to shoulder additional risk. BCSC would like to see LTRIP included as part of the TIF options to be explored as part of the Government’s Local Government Resource Review.
• review the implications of its policy on taxing empty property, which is adding increased cost pressures to landlords and retailers at a time when it can be extremely challenging to sub-let or sell property. The result of this is less cash being available to re-invest in struggling centres and an increased risk of landlords defaulting on loan agreements, as well as a significant disincentive to investing in new development.
• measures which ensure local authorities work together with their development partners in constructive ways to aid the processing of planning applications and delivery of development opportunities. Specifically, BCSC would like reassurance from Government that its new National Planning Policy Framework will genuinely support well-planned, sustainable development.
The BCSC/Lunson Mitchenall report shows the stark hiatus in the retail property pipeline, with 2010 being the lowest proportion of new retail space (2.2 million sq ft) built for 18 years. Three new centres are opening this year - Westfield Stratford City, Parkway, Newbury and Trinity Walk, Wakefield (totalling 2.7 million sq ft, of which Westfield is 1.9 million sq ft), but there are no new centres being built in 2012, and just one new development under construction – Trinity Leeds – planned for opening in 2013. The report estimates that around 50 million sq ft of retail development is currently on hold.
Richard Akers, BCSC President, comments: “The coalition Government has been talking a good game on pro-growth, however, more needs to be done to help the private sector deliver much-needed physical, social and economic regeneration in towns and cities across the country.
“Parts of the retail and leisure sectors are continuing to grow, and these expanding businesses will be key drivers of employment over the coming years, yet the level of development required to meet their needs is unlikely to return without Government intervention. That is why we are calling for further simplification of the planning system and the promotion of development finance mechanisms such as LTRIP.
“The issue of taxing empty property is still very relevant in today’s market, even more so given the Government’s retrograde changes announced at the end of last year. We are also seeing significant regional inequalities being entrenched as a result of the Government’s refusal to budge on this ineffective policy, in spite of unanimous industry support for its dissolution.”
Marcus Kilby, Managing Director, Lunson Mitchenall, comments: “The harsh reality from our research is that, with the exception of Trinity Leeds, the development pipeline is effectively on standby. Extensions to existing centres and new retail led regeneration schemes are being worked up on plan but converting plans to construction will largely depend on the willingness of retailers to commit to pre-letting space on financially realistic terms.
“Nothing will be built unless it is financially viable and the Government can play its part by allowing developer led TIFs, as they could be the financial mechanism that unblocks the system.”
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