Research commissioned by leading audit, tax and consulting firm RSM UK shows that 35% of businesses said that additional tax restrictions will be a key barrier to investment, jumping 12% on the previous year. The survey found that business rates (33%) and political instability (31%) were also perceived as major barriers to investment.

Nearly a third (31%) think capital gains tax and stamp taxes should be reformed to increase investment, with residential property growth in the North West remaining flat at 11% year-on-year. Fewer businesses also expect the region to see growth in commercial property (10%), down from 14% the previous year.

But, with significant investments announced for commercial, residential and sports developments this year, Peter Graham, partner and Head of Real Estate and Construction at RSM UK in the North West, discusses how the region’s real estate market may be seeing the first signs of green shoots.

Peter Graham comments:

“The Spring Statement did little to alleviate the key tax concerns for the UK’s real estate industry as expected, given the small fiscal headroom following the 2024 Autumn Budget. We know the industry feels held back from growth due to punitive tax measures which are disincentivising investment and making home ownership less accessible, with stagnant and falling growth anticipated in the North West’s commercial and residential property markets.

“The Planning and Infrastructure Bill will remove red tape and help to tackle the UK’s housing crisis, ensuring the region’s local authorities have more say over housing supply, while also supporting the government’s target of building 1.5 million homes. But, with tax constraints at the forefront of investors’ minds, further tax reforms are required to incentivise investment and make these targets a reality. It’s unlikely that any major changes will be made to capital gains and stamp tax regimes soon, so reforming one of the newer regimes such as Residential Property Developer Tax could be a short-term solution to stimulating investment.”

He added:

“However, there are reasons for the North West’s real estate industry to be optimistic. We’ve seen significant investment announced this year including the No1 St Michael’s office and commercial development in Manchester, regeneration of Old Trafford and Trafford Wharfside, and Downing’s Square Gardens co-living scheme in Manchester. The demand for premium office, residential, leisure and retail spaces position the region as an attractive place to work and live, boosting investor confidence, encouraging more tourism and supporting local businesses. It is therefore crucial that in the run up to this year’s Autumn Budget, the government provides businesses with clarity and the right tax environment to commit to long-term investments.”