19 May 2017
Phoebe Rountree summarises the pledges in the general election manifestos that will affect the real estate industry.
The party manifestos have been launched, and we finally know exactly what we are going to be voting for on 8 June. The propositions put forward by each party are as divergent as they have been in decades – which is an impressive feat given how much of Labour’s territory, both in policy and geography, Theresa May’s team (as the Conservative party has taken to branding itself) is marching into.
With opinion polls firmly predicting a strong (and stable) Conservative majority, much of the media and analytical focus has been on the Conservative manifesto, which starts on an upbeat note with a list of “five giant challenges.” It is striking how much of what the Conservatives recognise as major challenges correlate to the same themes whose impact the real estate industry has been considering for the last few years.
Points 4 and 5 on the list, “an ageing society” and “fast-changing technology,” hark back strongly to the lengthy discussions we have had at our last two Annual Conferences about how demographic and technological change will affect how people use and invest in real estate. Point 1, “the need for a strong economy,” is inevitably interlinked with the health of the real estate sector, given that virtually every other major industry in our economy relies on having the right real estate in which to operate. And of course, point 2, “Brexit and a changing world,” constitutes one of the biggest concerns that international investors have pointed to for years – uncertainty.
Unsurprisingly, much of what the Conservative manifesto says on Brexit echoes the “hard Brexit” positioning we have already seen in the Article 50 notice and the Great Repeal Bill White Paper, with no wiggle room on plans to leave the single market and customs union. The Liberal Democrats, who have managed to gain some momentum in this election by appealing to passionate remain voters, pledge to hold another referendum once the terms of our future relationship with the EU have been negotiated, with the option of staying in the EU included on the ballot paper. And Labour find themselves in between these two stances, pledging to support the Brexit process but seek guarantees on certain rights while doing so.
Beyond the dominating white light of Brexit, however, there are buckets of other policy proposals on domestic matters that affect real estate. Below is a summary of the various pledges affecting our industry concerning housing and planning, tax, devolution, energy, and healthcare.
The swathes of UK residents affected by the housing crisis are promised various different numbers of new homes depending on which manifesto they consult. The Conservatives commit to meeting the 1 million homes target by 2020, as well as an additional 500,000 by 2022 – but plan on doing so primarily by delivering the reforms already promised in February’s Housing White Paper. Although there was much to welcome in the white paper – particularly around supporting build to rent and ensuring a variety of tenure options to choose from – 1.5 million homes in five years seems almost incredulously optimistic.
Their manifesto contains some interesting rhetoric on the quality of private housing: “careless developers, high land costs and poor planning have conspired to produce housing developments that do not enhance the lives of those living there.” The Conservatives promise to support high-quality, high-density housing such as mansion blocks, mews houses and terraced streets, and to get 160,000 of these homes built on government land.
We remain in the dark about how the Conservatives intend to address land value capture. The manifesto simply promises to “work with house builders to capture the increase in land value” – we don’t know whether this is through introducing the Local Infrastructure Tariff proposed in the CIL review that DCLG commissioned in 2015, through continuing with CIL and s106 as they stand, or through the introduction of an entirely new system. The Housing White Paper promised that government would respond to the CIL review in the Autumn Statement, so we may have to wait until December to know more.
The Conservatives, Labour and Liberal Democrats all promise the ever-elusive review of business rates. A switch from RPI to CPI indexation is expected regardless of election outcome, having been pledged by the Conservatives in the 2016 Budget and now in the Labour manifesto. The Conservatives reaffirm their intention to introduce more frequent revaluations and promise to consider introducing valuation self-assessments, while Labour promises “a proper appeals process.”
More broadly the Conservatives also promise to “simplify the tax system”, and also to take a more proactive approach to tax transparency – a laudable objective as long as it doesn’t come with a swathe of overly onerous new compliance burdens on the law-abiding.
Theresa May’s Conservative Party has never been quite as overtly passionate about the devolution agenda as that promoted by David Cameron and George Osborne, but her manifesto offers no great cause for concern about backtracking. Hot on the heels of the election of six new ‘metro mayors’, the Conservatives promise to support the adoption of further elected mayors in combined authorities, but rule out their adoption in rural counties. LEPs and combined authorities are to be put in charge of coordinating local industrial strategies in line with national policy, with LEPs backed in legislation. And the government will put its civil servants where its mouth is, by moving “significant numbers” of public servants outside London and the south-east, including senior posts.
Labour meanwhile is promoting a new look at the constitutional balance between the four nations that make up the UK, pledging to appoint a Minister for England and establish a Constitutional Convention.
While the papers focused on the Conservative theft of Ed Miliband’s previously derided policy to cap energy bills, the manifesto also covered off a few points to get real estate energy efficient. In commercial real estate, the Conservatives promise to establish an industrial scheme to help large companies install energy efficiency measures, while in residential properties, the party commits to upgrading all fuel poor homes to EPC Band C by 2030 and to reviewing energy efficiency requirements in new homes.
The Labour manifesto takes a different tack, with a promise to take energy distribution infrastructure back into public ownership, but also focus on home insulation by promising to re-establish the Landlord Energy Saving Allowance and offer homeowners interest-free loans to improve their property.
Lastly, there is welcome recognition of the importance of healthcare real estate. While the Conservatives promise the implement “the most ambitious programme of investment in buildings and technology the NHS has ever seen,” the Labour Party pledges to boost capital funding “to ensure that patients are cared for in buildings and using equipment that are fit for the 21st century.”