As the year progresses, the East Midlands Business Link Magazine has reached out to regional business leaders for their insights and predictions regarding future trends, particularly in the face of economic changes laid out in the recent Budget. For over three decades, this initiative has provided a platform for experts to voice their thoughts on the evolving business landscape.
Robert Cole, Managing Director of the property consultancy Mather Jamie, has shared a cautious outlook, particularly regarding implications that he believes the new policies have for the agricultural sector. Speaking to the East Midlands Business Link Magazine, Cole remarked, "Without wishing to sound too negative, I don’t think their implications have been thought through and certainly not fully understood." He is concerned that rather than fostering economic growth, recent adjustments are likely to disincentivise businesses, particularly farmers and landowners.
One of Cole's central arguments is that the anticipated changes could lead to increased apprehension among banks about lending in the agricultural sector. This potential tightening of credit, he argues, could stifle growth when farmers and other businesses are already grappling with rising costs and economic uncertainty. Additionally, he forecasts challenges in the residential rental market, stemming from changes to stamp duty and increased employers' national insurance contributions, which are set to hinder employment opportunities as inflation continues to exert pressure on wage levels.
Digging deeper into the challenges faced by land and property owners, Cole elaborated on the implications of the proposed changes to Agricultural Property and Business Property Relief, which he believes could exacerbate existing issues. He highlights the distinction between theoretical wealth and actual financial viability for farmers who, despite having high land values, may struggle to convert those values into profit. With average returns in the agricultural sector often falling below 1%, the pressure on landowners is acute, particularly with his reference to the plight of farmers relying heavily on the unpredictability of weather and market conditions for their income.
An illustrative example presented by Cole involves a hypothetical farmer, referred to as Farmer A, who plans to sell an option to a builder for a piece of land. Although this deal could enhance the value of Farmer A's estate, changes to inheritance tax laws slated to take effect in April 2026 could trigger an immediate tax liability based on the inflated value of the estate upon Farmer A's passing. Cole highlights the risk this scenario poses, noting that beneficiaries could face tax bills that exceed their capacity to pay, a situation he sees as detrimental to the aspirations of future generations of farmers.
Looking ahead, he predicts a notable reluctance among farming families to engage in transactions or investments that may ultimately encumber their heirs with tax liabilities they cannot meet. Cole warns that this mindset could lead to stagnation within the agricultural sector, jeopardising not only growth but also the UK's food security in the longer term.
Compounding these challenges are anticipated effects of the changes to Stamp Duty Land Tax on the rental market. Cole predicts a potential increase in the sale of second properties as they become less attractive investments due to tax implications, which, while potentially increasing the housing supply temporarily, could further inflate rental prices and strain people reliant on the private rental market.
Despite outlining these obstacles, Cole maintains a hopeful perspective on economic policy, suggesting that Mather Jamie will continue to work with landowners, farmers, and businesses to identify solutions. He expressed optimism that the government might reconsider existing policies to promote growth. Yet, he also cautioned against the potential unintended consequences of policy decisions driven by political ideologies, underscoring the complex interplay between economic policy and industry outcomes.
Source: Noah Wire Services