Autumn Statement: Property remains a priority for South East and London SMEs
Ahead of tomorrow’s Autumn Statement, we spoke to SMEs across London and the South East about their hopes, expectations and predictions for the Chancellor of the Exchequer’s key speech.
The topic of property - from stamp duty to rental rates, tax to investment opportunities - remained a talking point for businesses in the region as the market continues to heat up, with little sign of slowing down.
Vivienne Harris, director of property management company, Heathgate on what Mr Osborne can do to do assist the prime London property market: “Well a first step might be to re-assess the tax take from Stamp Duty Land Tax (SDLT) as it is inevitable that the coffers will be hugely reduced, even to the levels prior to the adjustments last year.
“It is widely accepted that the Conservatives were not sure that they had the election in “in the bag” so to speak , and that they were concerned that Mansion Tax could be become a reality.”
“It is also almost certainly true that they felt they had to bring in a tax especially for those perceived to be wealthy but in truth, all this has achieved is a lower tax take, it has virtually killed off the property market at the top end, lessened the activity in the middle brackets and set light to the lower end of the market.
“We are now faced with the lower range homes becoming more expensive, due to the flurry from buyers with budgets from £150,000 up to £1,000,000.
“The prices of these properties have jumped significantly over the last year, making them even more unaffordable for first time buyers. The middle market is being squeezed down which will create a bottleneck around the £1m mark, leaving the top end to suffer in part due to the higher taxes but also the level of sterling against other currencies, making London uneconomic for foreign buyers.”
James Wyatt, partner of Surrey estate agent, Barton Wyatt would love to see some changes to stamp duty: “This Government have recklessly chosen to copy the Scottish SNP in having a top rate of stamp duty of 12%.
“Even the man in the street will understand that chains of transactions start and finish somewhere, but more expensive properties are selling much more slowly (and in some areas not at all) because of the huge stamp duty costs ensuring a stalemate.”
Stuart Maitland (pictured), director of Property Company The Maitland Group and one of the youngest entrepreneurs in the UK, agrees that the government needs to do more to support the economy through property: “My drivers are focused around supporting the [property] industry, specifically around local council support and right-to-buy investment opportunities; also injecting money into the housing market in order to build more council and housing association type properties as we need to have continued stock as people will be eligible after a certain amount of time to buy and this will and should continue for several years to come, this will help people get onto the housing ladder.
“I would like to see the Chancellor inject more funding into the property world to build more homes and assist property developers and relax the planning applications to speed the whole process up a lot more.
“I’ll add that from a housing perspective, he must take into account the substantial discount rate currently offered to housing association properties; how will this potential loss in revenue be subsidised?”
Paul Bulpitt (pictured), Head of Accounting at Xero and co-founder of the WOW Company, agrees that tax policies are taking their toll on small businesses: “In the short term, the main thing that small and micro businesses are hoping for is that the Chancellor will change his mind about the changes in dividends tax.
“This will hit the majority of owner-managers who currently use a low salary/high dividend approach. Accountants, myself included, have been deluged with questions from clients asking what they need to do to accommodate this change and this will have a huge impact on the ways these small businesses operate.”
“Also the Business Rates Review promised a response by 2016 but there is no reason why businesses should not expect an update in this Spending Review. The promise that there will be more help for high street businesses and a doubling of business rate relief for 500,000 of the UK’s smallest businesses are promises that should also not be allowed to slip under the radar.”
Alex Hoye, co-founder, Runway East, a members club for startups, and co-founder of GoIndustry on Brick Lane, which IPO’d in 2006 ($100m), reiterates the importance of tax breaks for small businesses, he said: “Business Rates are particularly burdensome for small businesses and the current structure is out-dated. Some businesses are paying more in rates than they are in rents – a farcical situation which has a damaging impact on incentives to invest and create jobs.
“The government has indicated that local councils will keep more of the Business Rates that they raise, instead of sending it all to Westminster to re-distributed. That is a sensible step which improves competition and may see new businesses spring up in areas otherwise devoid of genuine enterprise. But if it’s serious about supporting growth, investment and job creation, the Government should use this Autumn Statement to freeze business rates while it conducts a full-scale review of the system for setting them, to ensure that it is affordable and fair for the future.”
Sharon Argov, CEO and co-founder of Fundbird is concerned with the impact of SME financing: “With the Funding for Lending Scheme set to be phased out in January 2016, and the government referral scheme pushed back until “late 2016”, we hope that this Statement will bring about a serious conversation about SME financing in the UK.
“Although SMEs continue to bolster the growth of the UK economy, we are now starting to see worrying reports of a gap between their ambition and current productivity.”
“Despite a raft of negative headlines highlighting the impact of late payments, our data shows that the majority of SMEs seeking alternative finance are doing so to fuel expansion and growth.
“It would be a terrible shame to stifle this potential through a lack of available finance. Of course, simple availability of finance is not the whole picture – more must be done to support and coach SMEs through the many options available to them, to ensure they are able to confidently explore all the alternatives to traditional bank lending.”
Alistair White (pictured) at telecommunications software provider, Calltracks is keen to see Osborne take a tougher approach to tax avoidance, he said: “We’d personally like to see further measures on the issue of corporate tax avoidance. Large corporations shouldn’t have the advantage over smaller companies by masking their operations and offshoring their profits to the extent that they currently do. To encourage entrepreneurialism and to help small businesses - especially in London - we’d like to see this issue addresses further.”
Do you run an SME in London or the South East? Get in touch direct at firstname.lastname@example.org to contribute to future content.