Architectural buildings

The impact for the Property and Construction Industry

Stacy Eden, Partner, Head of Property and Construction
Architectural buildings

In delivering his Budget the Chancellor was facing a number of pressures around the property sector. Against an uncertain economic backdrop there have been concerns that Stamp Duty Land Tax (SDLT) is too high and high streets are struggling with business rates.

The press is continuously highlighting that getting onto the property ladder remains difficult for many due to a reduced supply of new homes. This has resulted in house prices being seven times the average wage.

So what did the Chancellor do?

While some new reliefs announced were welcome, it is disappointing that the opportunity was missed to do more for the sector.

Business rate relief

Measures were announced, but only for smaller businesses. There was no assistance for larger retailers and many feel that even after these announcements, business rates are at an unsustainable level.


There is a proposal to introduce an additional 1% for non UK resident buyers (in addition to last year’s additional 3%, which affects many non-resident purchasers). However, the British Property Federation (BPF) have estimated that 22,000 build-to-rent homes (15% of the sector's pipeline) are reliant on funding from overseas investors such as pension funds. Pushing costs up will clearly be unhelpful in delivering these projects.

New Structures and Building Allowance

The biggest surprise was the announcement of a new relief for commercial property owners, which is very welcome. The new structures and buildings allowance (SBA) for non-residential structures and buildings (land and dwellings will not be eligible for relief) provides a flat rate 2% allowance based on the original expenditure; where all the contracts for the physical construction work are entered into on or after 29 October 2018. The relief applies from when the buildings are first brought into use. There are no balancing allowances or balancing charges in relation to SBA on a future disposal of the building.

Annual Investment Allowance

It was encouraging to see the announcement on capital allowances to increase in the Annual Investment Allowance (AIA) rate to £1 million for qualifying capital allowances expenditure. The AIA allowance applies to £1 million of qualifying plant and machinery expenditure in the two year period from 1 January 2019 to 31 December 2020. Against this, the capital allowance special rate allowance that applies for many fixtures in buildings will reduce from 8% to 6% from April 2019.


While new reliefs are always welcome, many of the fundamental issues facing the sector remain. Our recent property survey highlighted that 60% of respondents think the UK tax system is unfavorable to the industry, with 80% of respondents stating SDLT being the biggest tax issue to their business. Furthermore, most respondents also highlighted issues with our Green Belt restrictions restricting development.

If you would like to discuss anything further or how these changes might affect you, please contact your usual Crowe advisor.

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Stacy Eden
Stacy Eden
Partner, Head of Property and Construction