Cumulative impacts of fiscal and public policy
Factors that are within government control are also clearly contributing to uncertainty and low confidence. In particular, recent UK Budgets and the perception of a tightening regulatory environment have introduced significant additional uncertainty. These combined pressures have supported a market slowdown, where the practical costs of land management and legislative compliance are now additional drivers of caution.
Changes to Inheritance Tax (IHT) are much talked about and have prompted increased valuation activity and strategic thinking among landowners, even if it has not yet translated into higher levels of land coming to market. There appears to be a growing sense that the IHT changes, while perhaps unwelcome, have been positive as many more farmers and landowners are seriously engaged in succession planning. In turn, this may indicate that the IHT changes are unlikely to raise much extra revenue and may only catch the estates of the unlucky and unprepared in future years.
Alongside IHT changes, adjustments to Employers National Insurance and Sporting Rates are also cited as fiscal policy measures that are hurting market confidence.
Meanwhile, a range of other public policy interventions across environment, agriculture, land reform, and housing – from both Scottish and UK Governments – are also reducing market confidence. Agents do not seem to be particularly worried about any single public policy measure, it’s more the sense of there being a near constant stream of different things to consider and act upon that hinders planning, delays investment, and dampens market activity.
Better coordination of policy across and between Scottish and UK Governments would go some way to help alleviate concerns and facilitate joined up planning that supports investment. It is also hard to escape noting that this top-down approach itself may be problematic, and that greater regional or local control of land use and related policy – as seen in European peer countries – may be more productive and effective in delivering positive outcomes.
