Mayoral elections: What do they mean for real estate?

8 May 2017

Policy area: Regional

Rachel Campbell summarises the results of the elections of six new metro mayors across England, and what we know so far about how their leadership will impact on real estate investment and development.

For those of us who have followed the devolution agenda since its inception, Thursday’s ‘metro mayor’ elections were a long time coming. But they still managed to produce some interesting results – as well as one outright shock, and a number of questions.

Tim Bowles winning the West of England for the Conservatives was the first result to be announced, followed by Steve Rotherham (Labour) taking Liverpool City Region in a convincing win. Then the shock: once second preference votes were counted, Ben Houchen emerged as the victorious – and Conservative – candidate in Tees Valley, a region where six of the seven local MPs are Labour, and all five of the local authorities in the combined authority are led by Labour councillors. Andy Burnham winning Greater Manchester with a significant majority for Labour came as no surprise, while the West Midlands competition was far closer – Andy Street came out on top in a narrow victory for the Conservatives. Cambridgeshire and Peterborough was the last region to announce its winner, with James Palmer (Conservative) winning on second preferences.

And there you have it: six new mayors, in six very different city regions, with six combinations of powers and constraints.

While detailed policies were thin on the ground in the mayoral manifestos, there are a few early indications of some of the new mayors’ priorities for their regions that will have significant impact on the real estate sector. Not surprisingly, housing development played a leading role in many of the campaigns: Burnham wants to redraft the Greater Manchester Spatial Framework, for example, much to the chagrin of many who have worked to establish some cross-region consensus on the long-term development needs of the area. In the Liverpool City Region, expect a speedy summit to be called if Rotherham fulfils his promise of a ‘Mayor’s Housing Challenge’ seeking innovative ideas to tackle the region’s housing crisis; and Street has promised 165,000 new homes will be built in the West Midlands by 2030. Houchen has been supportive of a ‘new town’ built in the Tees Valley as well as pushing for greater development on brownfield land, a concept also supported by Bowles.

Skills development and infrastructure are two further issues likely to be at the top of the new mayors’ to-do lists, with Street already mooting the potential for land value capture options to fund new infrastructure projects. Much of the mayors’ ability to succeed will obviously depend on their (hugely varied) budgets – most will be allowed to raise a mayoral precept, and all will have borrowing powers and be able to raise an infrastructure levy from business rates. At least, that’s what the Local Government (Finance) Bill promised – but the Bill was still progressing through parliament when the House rose last week in advance of the general election and therefore will need to be reintroduced next session if the promised powers of local authorities retaining 100% of business rates, and mayors being able to raise an infrastructure levy from these, are to be implemented.

The mayors may feel somewhat in limbo until after the general election, when the legislative status of these changes may be resolved and it will become clearer who they need to work with throughout their tenure. The Conservatives undoubtedly did better than might have been predicted, winning the mayoralty in four of the six city regions. This is likely to renew their – and particularly the Prime Minister’s – interest in devolution, and it will be interesting to see to what extent this is included in the Conservative manifesto (expected to be published next week) and how they will link it to their draft Industrial Strategy.

So despite the results, some things remain unclear. But one thing is for sure – there is strong interest from domestic and international investors in the regions, and a huge opportunity for the new mayors to play a leading role in attracting this investment. We look forward to working with them to ensure that the regional real estate markets continue to flourish.

We are holding the next round of the BPF regional Committees at the end of June, where we will cover the mayoral and general election outcomes.