UK Real Estate "Property Tax Reform on the Agenda" Gauge

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UK Real Estate "Property Tax Reform on the Agenda" Gauge

Implications for our coverage – London weighting increases taxation risk

Our coverage has a disproportionate weighting to London and, in our view, this

heightens potential exposure to any taxation reforms emerging from current policy

discussions. We have previously argued that LAND's residential development strategy is

unlikely to progress due to challenged viability; and any potential changes to the

property tax system could create further potential headwinds. SHC and BLND have

modest exposure to the London residential rental market, although we would expect

any direct earnings impact to be limited. UTG's model already embeds a wide range of

occupancy costs within an all-inclusive rental structure, which may make it operationally

easier to absorb and reprice any future property-related tax changes. By contrast,

smaller-scale landlords operating HMOs and PRS assets may have less flexibility to offset

additional ownership costs, particularly against the backdrop of the Renters' Rights Act

and an already challenging regulatory environment. SEGRO may also face both direct

and indirect exposure. On the direct side, c.7% of SEGRO's UK portfolio is held as

development land, which would be among the areas most directly exposed under a

genuine land-value-tax regime. And on the indirect side, Burnham's team has advocated

shifting part of the business-rates burden towards large e-commerce warehouse

occupiers to fund relief for smaller businesses - which may increase occupational costs

for a few key tenants. While DLN and GPE have negligible direct exposure to the

residential market, both could face an incremental increase in taxation pressure through

their development land holdings under a pure land-value-tax regime.