The impact of enterprise zone tax incentives on local property markets in England: who actually benefits?

Abstract

Research on the impact of property taxes on local real estate markets has a long history in the urban economics literature but few studies have considered this issue in the context of the commercial real estate market or on data from outside the USA. This is surprising given the use which governments make of property tax exemptions to assist local regeneration with the UK Government recently announcing some 24 new enterprise zones (EZs) in England. In this study we use a novel data-set on commercial real estate leases to investigate the incidence of the local property tax savings. Our data-set covers both taxed and tax exempt areas during the operation of the EZ designations in the UK. Our findings show that a large part of the tax savings appears to be captured in higher rents charged by landlords.

Evaluation of the local employment impacts of enterprise zones: A critique

“…One of the processes that might explain why enterprise zones sometimes do not create employment is a potential capitalisation of enterprise zone subsidies by property investors, developers and landowners. They may be able to react to the increased property demand by increasing the sale or rental prices of land and premises on zones, until the profitability of firms is equal on and off zones, leaving firms indifferent to an on-zone or off-zone location (Bond, Gardiner and Tyler, 2013;Landers, 2006). The scale of capitalisation could be influenced by factors such as the scale of availability of vacant local premises and the share of tenants and owner-occupiers on zones.…”

“…On the other hand, there are some indications from specific evaluations that some of these aspects of zone programme design and context may be influencing employment impacts. One of the major criticisms of enterprise zone policy is that it may offer important windfall gains to pre-existing businesses on zones if they are able to access employment or capital subsidies intended to encourage growth without changing their behaviour (Bartik, 2001; Bartik and Eberts, 2012;Bond, Gardiner and Tyler, 2013;Neumark and Grijalva, 2013;Neumark and Simpson, 2014 showing that there was no impact on the economic activity of incumbent firms in French zones although they were eligible for most of the tax incentives by their simple presence in the zone. Programme designs that make subsidies conditional on new hiring might reduce this windfall effect.…”

Building heritage in Enterprise Zones: the latest threat or opportunity?

“…Even though there is much debate as to their expected economic success (Squires and Hall, 2013;Bond et al, 2013) and a great deal of parallel literature regarding heritage's role in regeneration and redevelopment, (English Heritage, 2005Kindred, 2000;Pendlebury, 2002;Williamson, 2010) there is currently a significant lack of literature and guidance in relation to where heritage sits within the Enterprise Zone scheme. The scheme prospectus itself fails to acknowledge the implications on heritage (DCLG, 2011).…”

“…Although steps are undoubtedly required to resolve an unsatisfactory economic position, there is growing concern that this deregulation and step change in attitude towards planning control, combined with a focus on economic growth, could see the heritage of these areas threatened in the attempt to satisfy short-term goals (National Trust, 2012). Even though there is much debate as to their expected economic success (Squires and Hall, 2013;Bond et al, 2013) and a great deal of parallel literature regarding heritage's role in regeneration and redevelopment, (English Heritage, 2005Kindred, 2000;Pendlebury, 2002;Williamson, 2010) there is currently a significant lack of literature and guidance in relation to where heritage sits within the Enterprise Zone scheme. The scheme prospectus itself fails to acknowledge the implications on heritage (DCLG, 2011).…”

Small business property tax reductions and job growth

“…Owner-occupiers should have longer lasting gains from any SBRR reduction, as they will be capitalized into higher property values. 5 Also seeBond et al (2013) for work on capitalisation in Enterprise Zones 6 Commercial research employing rental data finds 75% capitalisation of BR over a period of two to three years(Regeneris, 2015)…”