Real estate and infrastructure stakeholders reacted positively to the UK budget, which outlined a range of measures designed to boost economic growth and attract investment.
Key initiatives for investors include the pledge to introduce the reserved investor fund (RIF), a new tax-transparent onshore vehicle, and the establishment of the National Infrastructure and Service Transformation Authority to streamline infrastructure delivery.
Additionally, Chancellor Rachel Reeves announced the government’s commitment to significant investment in affordable housing and reforms to the planning system to boost housing supply.
The Association of Real Estate Funds (AREF) said “confirmation that the RIF will be taken forward is very welcome as this will make the process of setting up new onshore funds for professional investors far quicker and more cost-effective”.
The planning system needs urgent reform and therefore the additional funding and upskilling announced in the budget is very welcome, as is the ongoing consultation on changes to National Planning Policy Framework, AREF added.
Melville Rodrigues, head of advisory, real assets at Apex Group, said he welcomed the government proceeding with secondary legislation that enables UK fund managers to launch and operate RIF.
Secondary legislation for RIF will be brought forward before the end of the tax year 2024-25, according to the budget statement.
“I hope the RIF will be a conduit to attract capital, better returns for pension members and enhance investment in the UK economy. I look forward to the RIF being utilised by UK fund managers of all sizes from SMEs to larger managers.
“I am very grateful for the officials’ constructive engagement with, and widespread industry support for, the RIF proposal. I encourage UK managers to get ready to seize the RIF opportunity,” said Rodrigues.
The budget places emphasis on the UK’s transition to net zero and its clean energy mission as it touched on increased investment in offshore wind, solar and hydrogen projects including the continued support for the Sizewell C nuclear power plant as well as investment in flood resilience and sustainable agriculture.
Ted Frith, managing director at GLIL Infrastructure, said: “It was, in many ways, a budget to watch from behind the sofa for taxpayers – raising £40bn (€48bn) in additional public revenue was never going to be a comfortable adjustment. But, in that context, any announcement that supports investment in the UK, particularly core infrastructure, is to be celebrated – £70bn of investment capital catalysed through the national wealth fund will, I hope, be money well spent. Funding commitments for ports, train line electrification, aerospace and the automotive industry were also welcome.
“We’ve long said that securing capital is not necessarily the key piece of the puzzle. Speaking from a pension fund’s perspective, appetite to invest in the UK is not the problem, it’s the availability of suitable projects that often holds investors back.
“The Chancellor’s commitment to improve infrastructure delivery suggests this government understands that and is starting to provide policy clarity to support the rhetoric. Alongside the ongoing overhaul of the planning system, this could remove some of the hurdles to UK investment.”
The budget also outlined initiatives aimed at boosting housing supply and market stability, including a £500m boost to the affordable homes programme, long-term funding commitments for social housing providers, reforms to the planning system, unlocking stalled housing developments and supporting the private housing market.
Paul Richards, AREF’s CEO, said: “This budget is a welcome start with concrete announcements to boost investment into housing development, reduce the rates burden on certain sectors, provide an upgraded and better-resourced planning system and provide the fund structures that the industry needs.
“However, we believe that urgent reform is still needed to the UK pensions system in order to free up investment into growth assets. We look forward to working with the government on measures to address this problem.”
Melanie Leech, CEO of the British Property Federation, said: “Measures to support the delivery of more homes are welcome but the Chancellor knows that much more is needed if the government is to deliver on its 1.5m homes pledge. The promised housing strategy needs to be much bolder and go much further.
“This includes unlocking the billions of pounds of investment into the build-to-rent (BTR) sector, so it is particularly disappointing that Rachel Reeves did not take the opportunity to reverse the previous Government’s decision to abolish multiple dwellings relief announced in Spring.”
Paul Rickard, MD at affordable housing developer Pocket Living, said the chancellor’s commitment to £3bn of guarantees for SME housebuilders and build-to-rent BTR providers is a much-needed boost for housebuilding.
Rickard added: “The number of SME housebuilders has dwindled from 12,500 in the 1980s to just 2,500 today, and if the government is to have any hope of hitting its 1.5m new homes target, it has to get them building again. So today’s measures are a welcome step forward as we await a comprehensive plan for SME housebuilding as a key part of the government’s housing strategy in the Spring.”
Will Matthews, head of commercial research at Knight Frank, said: “For commercial real estate, a few themes stand out. First, the government’s supply-side push majors on infrastructure investment. We need to see the detail, but we can expect a positive impact for commercial development.
“Second, the ‘Get Britain Working’ campaign, at the margin, could boost employment and increase demand for employment space, but we’ll be alive to any counter impact from higher minimum wages and higher employer National Insurance contributions.
“Finally, the changes to carried interest and the end of the non-dom regime will be felt but do not disadvantage the UK versus other G7 economies.”
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