UK’s property sector highlights needs as Labour takes the reins

As the country digests the implications of Labour’s landslide in the UK’s general election, held on 4 July, representatives of the real estate sector have been swift to voice their opinions and advise on the path that the new government should take.

“As part of a UK-listed entity with circa £40 billion in assets under management, M&G Real Estate is ready to partner with policymakers to drive real estate renewal across the UK,” said Martin Towns, deputy global head of M&G Real Estate. “By fostering a collaborative environment, we can ensure a prosperous and sustainable future for our real estate market.”

Among a number of recommendations, Towns said that policy makers should look abroad and emulate the Singapore Economic Board, or Ireland’s Development Agency model to encourage “a laser focus on the key sectors and asset classes which will drive future competitiveness and growth to attract private capital”.

Towns also called for an overhaul of business rates, an opinion that is widely held. “We need a fairer and simpler system that doesn’t actively work against the viability of thousands of projects,” he said.

Overhaul business rates

Etienne Pronguė, chief executive officer, BNP Paribas Real Estate, said: “Labour has made potentially game-changing pledges on business rates and planning reform, as well as outlining a bold vision for unlocking private investment across the UK.

Etienne Pronguė.

“While these have been long-awaited, this time the new Government has the mandate and political will to bring forward long-lasting change. Moreover, with government spending so constrained, they simply must deliver if they are going to make good on their promise of growth.”

The need for planning reform is a theme that echoes across various UK real estate sub sectors. “We’re encouraged to see planning reform at the heart of policy priorities and hope this translates into swift, tangible reform and funding, not only in the short term but with a long-term vision and stability,” said Nalaka De Silva, head of private markets solutions, Abrdn.

Need for planning reform

Knight Frank senior partner and group chair William Beardmore-Gray had more specific advice: “The new government also needs to play its part by making ambitious changes to the planning system. This should be through immediately reinstating housebuilding targets, recruiting more planning officers to increase capacity and reduce delays and strengthening rules around designating sites for new towns and housing of all tenures.”

William Beardmore-Gray

Many of the calls for planning reform result from the housing supply crisis in the UK and there are calls to address the sector’s problems from different directions.

“Meaningful support for first-time buyers should be a priority,” said Beardmore-Gray. “Only with this emphasis on both supply-side reform and measures to stimulate demand can there be any hope of turning around the growing chasm between supply and demand, an issue which is seriously impacting on the quality of life for people in the UK.”

Housing market a priority

Rick de Blaby, chief executive of build-to-rent investor, developer and operator Get Living, which is notably currently working on the Elephant & Castle Town Centre development in south London, said: “Everyone knows that our planning process is not fit for purpose and is holding the UK back from delivering at the scale that we could and should be.”

Rick de Blaby.

“We know it’s impossible to solve the country’s problems overnight, but as we find ourselves in the midst of a nationwide housing crisis where new homes of all tenures are badly needed, what we urgently need is a grand vision and a comprehensive plan to fix this crisis, which recognises development as a force for good and enables us to attract the capital required to build.”

He added that any increase in housing must be accompanied by the infrastructure that is essential to support it. “With this in mind, it will be interesting to see how Labour intends to progress its plans around new towns. On paper, this would help to bridge the gap but there are some concerns around the viability of these projects.”

Pocket Living chair and founder Marc Vlessing said that Labour’s victory “can be the catalyst for a radical reset of the UK’s ailing housing sector”.

Marc Vlessing.

“Only through a return to successful public-private partnerships and bold new government-led delivery vehicles can the country’s biggest problem be solved. Without this, millions will see their lives blighted for decades to come.”

Vlessing added that the SME sector is at its smallest since the 1980s. “The Government will never hit its 300,000 homes a year target unless it can revive this sector.”

That was a sentiment echoed by Mike Bristow, CEO of CrowdProperty, a fintech/proptech finance provider that specialises in lending for development.

Help for SME developers

“Finance, which is a major concern for SME developers, is critical to increasing output and should be a policy focus area. Any levers that can be pulled now to help attract additional public and private capital, will help relieve sector-wide pressure and deliver the additional housing that is so desperately needed.

“In the 1980s, 39% of new homes were being built by SME developers, now it’s just 10%. With plentiful supply of small sites, infill, conversion and refurb opportunities, SME developers aren’t constrained by the availability of large sites like the volume housebuilders and this is the answer to delivering the 1.5 million homes [that Labour has committed to building in the next parliamentary term]. We need clear policies to specifically support this vital segment, potentially as widespread as finance, tax, planning and employment.”

And he warned: “Momentum is against Labour too – housebuilding starts in 2023 stood at just 176,000, with starts in the second half of 2023 in particular plummeting by 44% on the previous year. This further muddies the water and adds concern in relation to seeing an uplift in housebuilding output in 2024/25.”