“REAL ESTATE FUNDS ARE READY TO INVEST, INVEST, INVEST”
ASSOCIATION OF REAL ESTATE FUNDS COMMENTS ON BUDGET
London, 30 October 2024: The Association of Real Estate Funds – the trade body for investors in real estate, with £50bn in member assets – welcomes Chancellor Rachel Reeves’s first budget.
We welcome the Chancellor’s commitment to “invest, invest, invest” and the emphasis of the budget on growth, with measures across skills and training, funding for the development of housing of all tenures, greater research and development, a better resourced and upskilled planning system and the execution of the modern industrial strategy.
In the housing arena we welcome the additional support through housing guarantee schemes for SMEs and the Build to Rent sector, the boost to the Affordable Homes Programme and the commitment to set out details of future grant investment beyond the current Affordable Homes Programme.
However, we believe that the strategy can go further by reversing the previous Government’s decision to abolish multiple dwellings relief.
With many social housing projects currently providing little or no return over gilts, measures are needed from government to make these projects more attractive to investors. We therefore welcome the consultation on a new long-term social housing rent settlement to provide long-term certainty for social housing providers. However, given the current marginal viability of projects in this area, further measures on the capital side may be needed to kickstart growth in completions.
In the commercial arena the 40% rates relief for retail, hospitality and leisure is welcome, although there is little or no reduction in the overall rates burden so, for the moment, this is simply shifting the burden to other occupier sectors for the moment. We hope that this is a first move towards a much-needed longer-term reform of the business rates system.
Some of the main obstacles to investment in growth assets in the UK are the structural and operational impediments making it difficult for the fast-growing UK DC pensions sector to invest in real estate, infrastructure and venture capital. It is therefore disappointing to see no further specific measures in this Budget, although we do note that the Pensions Review is underway.
On the funds side, confirmation that the Reserved Investor Fund 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. We also welcome the newly-announced social impact investment vehicle and look forward to working with the government on its development.
Lastly, 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.
Paul Richards, chief executive officer at the Association of Real Estate Funds, says: “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.”
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For further information, please contact:
Paul Richards, AREF: [email protected]
David Butcher, Communications and Content: 07834 350101 or [email protected]
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