Why Professional Accountancy and Financial Advice Are Essential for Businesses in the Property Sector
Specialist property sector accountants highlight potential changes due to the shift in the UK government, and how an accounting provider with expertise in the property sector can assist
The volatile economy, long periods of high interest rates and the reforms expected due to the change in UK government are all likely to have impacted or hold future ramifications for property sector businesses, from landlords and investors to contractors and developers.
Businesses trading in the property space are understandably concerned or unsure how the announcements made during the election campaigns will impact them or whether every proposal included within the new government's manifesto will likely be realised in the immediate future.
James Todd & Co, a business accountancy and advisory practice, has compiled this guide to clarify some of the potential changes to be aware of and how an accountancy provider with expertise in the property sector can assist.
How Might the Change in Government Impact Property Sector Organisations?
We recognise that a change in government, outside of politics itself, can create an environment of uncertainty, particularly for property sector businesses, with so many proposed changes to regulations, rules, incentives, and schemes.
Several areas that were either included in the Labour Party's manifesto or hinted at during the election campaign may have ramifications for the sector.
Some may be positive, and others could change the way property businesses manage their tax exposure, regulatory compliance, and plan for commercial growth. The essential factor is to be mindful of potential changes to come, and to ensure your business is well prepared for all eventualities.
As a quick snapshot, here are some of the elements we’d suggest you be aware of and consider when making any ongoing strategic plans or investment decisions.
Building a Projected 1.5 Million New Homes
The new government has committed to building more affordable housing to address shortages, with proposed investments in social housing developments and support schemes to provide greater access to homeownership.
Opportunities may be advantageous for contractors, developers and investors, whether they currently are involved in housebuilding, wish to bid for future contracts to undertake new developments, or can pivot forthcoming development plans in light of this key pledge.
Changes to Energy Efficiency Standards
Initiatives are planned to introduce new green building approaches and make existing properties more energy-efficient, with a blend of environmentally friendly developments and schemes to reduce the cost of energy-retention upgrades.
There will also be changes to the standards applied to rental properties, designed to improve general property conditions and to reduce the cost of utilities for tenants.
Reforms to Property Sector Regulations
Suggested stricter regulatory controls are anticipated, which could impact developers and property agents, with harsher penalties for non-compliance. Most changes will relate to planning consent, with a proposed National Policy Planning Framework, which will provide greater funding for local authorities and provide local planning officers with more resources to clamp down on non-compliance.
The long-awaited changes to the rental space may also proceed, with the Renter's Rights Bill included within The King's Speech. With the same caveat that further amendments are possible, the Bill proposes to abolish Section 21 evictions for all residential tenants and to place caps on upfront rental payments.
These changes may have little impact on landlords and portfolio investors, or they could mean that businesses and property management firms need to consider the controls in place to avoid potential conflicts or disputes.
Revisions to Property Taxation
Future changes to property taxes may include revisions to the stamp duty tax levy and potentially higher stamp duty rates that increase progressively depending on the assessed property value.
Currently, we are thin on details, but there have been mentions of a progressive tax system, reduced stamp duty for first-time buyers, and changes to property taxes in general.
Some suggestions involve making it easier for first-time buyers to enter the property market. A proposed Mortgage Guarantee Scheme, unlike previous iterations, will be permanent. Should this go ahead, there may be positive opportunities for housebuilders and developers, particularly those concentrating on investing in and building ‘starter homes’.
How Can Property Sector Businesses Prepare for Legislative Reforms?
It’s important to reiterate that most of these changes are proposals or pledges, and while some may become law, others may not – much depends on support for any proposed new legislation, and changes are always possible.
Our advice is to be proactive and to speak with one of our knowledgeable property sector accountants to discuss the agility and stability of your organisation and to ensure that any reforms that may have the greatest impact on your business are well prepared for.
Advance planning is key and can ensure your business isn’t exposed to sudden changes in tax obligations, operating costs or expenses connected to compliance – but has the right planning in place to cope and thrive.
Seeking Support From a Property-Focused Financial Advisory Team
Step one is to speak with one of our property sector specialists. We'll start by conducting a thorough audit and appraisal of your current controls, risk management approaches, financial position, and aspirations. This helps us put together a picture of your business and trading environment and the areas in which any future changes will most impact you.
From there, our accountants and business mentors work closely with our clients to create future-proof, robust strategies, introduce better efficiency and automation, ensure all available tax efficiencies are fully utilised, and look at your forward plans and budgets to spot any room for improvements or increased revenue generation.
In some cases, a business may be well prepared and have already made changes that will help with compliance or mean new schemes and initiatives are a fantastic opportunity to scale and grow. Working with an independent mentor or adviser remains hugely beneficial.
Read more about James Todd & Co - Leading West Sussex Audit Specialist, James Todd & Co, Reports Substantial Increases in Demand for Audit Services
About James Todd & Co
James Todd & Co have been providing accounting services for more than 30 years across Chichester, Fareham, and Lavant for Sussex and Hampshire businesses. Their clients trust them to provide bookkeeping, financial auditing and compliance, management accounting and financial advisory services.
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Source Company: https://www.jamestoddandco.co.uk/