COMMENT: Housing aside, real estate seldom figures prominently in general electioneering. It may only be the early days of this – mercifully short – campaign but this time it feels different. With the ink still drying on the party’s manifestos, it seems that each of the three main parties is focusing on areas where this sector has a significant role to play.
Boris Johnson, Jeremy Corbyn and Jo Swinson all took to the stage at this week’s CBI conference; separately, of course. And each of them, though they may not yet realise it, will need real estate to play a significant part if their ambitions for remodelling the UK are to be realised.
The prime minister was first to the stage. He bounded on after CBI president John Allan had warned that the uncertainty of the past three years had been “utter kryptonite for investment” which, Allan said, had “now fallen for six quarters in a row – absolutely unprecedented for this point in the cycle”. His was a message that would have resonated with the REITs, advisers and real estate investors sat among the 1,000 businesses in the audience.
Johnson began by reminding the audience it was he who had given planning permission for the conference venue, the Intercontinental at the O2 Arena. “We are the party of building,” the prime minister was quick to stress.
He pointed to a big role for real estate in closing UK’s “opportunity” gap which could be closed with “better infrastructure, better education and technology.” He talked of investment in brownfield sites and how that would underpin the building of a huge number of homes. “We’re going in the right direction but we need to do more,” he said, promising support for part-buy, part-rent schemes as he looked to the market to “build thousands more homes to get people on to the housing ladder”.
The PM leant heavily on his time as mayor (“we did it in London, we’ll do it for the rest of the country”) and showed he hadn’t lost his appetite for “supporting fantastic projects” like Crossrail. He promised support for Northern Powerhouse rail, the West Midlands metro and “other big ticket items”. HS2 was conspicuous by its absence though, let’s hope, that may have been unintentional.
But these weren’t just warm words, there was a confrontational edge to his commitments too. “Obstructions in planning” needed to be addressed if those brownfield sites were to be “liberated”. More small developers, meanwhile, were needed to counterbalance the “oligopoly” of a small number of large developers.
If Johnson had touched on sustainability (“we’ll do more for the environment, not just adopt a hair shirt approach and attack consumption”), Corbyn put it front and centre.
Tackling the “climate emergency” and “transitioning to a green economy” would be a priority for his government. This Labour party may not be a natural bedfellow for the real estate industry, but the two would have to work hand-in-glove to deliver on those ambitions.
Retrofitting homes was necessary, said Corbyn, while a sustainable investment board would be led by the chancellor, the business secretary and the Bank of England governor. Infrastructure, meanwhile, would see “investment on a scale our country has never known”.
Swinson was last. With Johnson and Corbyn both light on detail, hers was the most detailed pitch. Her focus was on scrapping Brexit but, assuming that’s not going to happen, it the Liberal Democrats’ commitment to scrap business rates that will most intrigue this sector.
It is a tax with few fans outside the Treasury but the promise of a commercial landowner levy, which moves the burden from tenant to landlord, may not be the solution real estate is looking for.
“An innovative, bold policy that’s needed,” said Swinson. “Business rates can be a crippling cost. It being born by landlords, clearly some of it will be passed on. But not all of it.” It will go some way to “rescuing the high street”, she added.
There was a pretty clear divide in reactions to the proposal on my Twitter timeline.
Broadly speaking, tenants were very much in favour with landlords and their advisers against.
Would levy be passed on where possible? Will it break some landlords where not? And will it win votes?
On all three counts it’s probably a yes.
More than that the volume of responses showed how critical an issue the tax has become – for some it clearly matters more in the short term than sustainability or – whisper it – Brexit.
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