Today is a significant milestone for the UK. Businesses like certainty and stability – two things that have been sorely lacking over the past three years. However, for the property market, there are still as many questions as answers.
There is no doubt that we have seen an upturn in confidence in the residential sector. Since the General Election, the number of applicants interested in buying a home has trebled. We have also seen a noticeable increase in the number of properties under offer compared to 12 months ago. Our agents are hearing the same thing – people are tired of putting their lives on hold.
But getting on the housing ladder remains a big challenge. The government’s home building commitments will help – more stock naturally levels out the market and corrects prices. But there remain questions on how we help first-time buyers financially, especially after Help to Buy ends. Allowing councils to buy land to commission more homes at a price people can afford could also make home ownership more accessible.
Changes to stamp duty have also played their part in the recent slump – making people think twice about upsizing. The industry waits with bated breath to see if the Chancellor reforms stamp duty in 2020.
Whilst sales have been difficult since the referendum, the residential lettings market has been buoyant. That said, legislative changes have resulted in private landlords having their returns squeezed – in some cases resulting in them deciding to sell. At the same time, increasingly, institutions are entering the lettings market, with build-to-rent gaining traction. This swing is likely to increase in 2020.
On the commercial side, whilst activity has increased since the election, many businesses and investors are still sitting on their hands, waiting to see the shape of the trade deal with the EU before committing to significant moves in this particular sector. The upcoming Budget promises to be one of the most important in living memory and many of our clients have 11 March firmly circled on their calendars.
The rhetoric coming from Whitehall on infrastructure investment is positive. But there are deeper underlying issues that need addressing.
One challenge that needs to be unpicked urgently is the lack of trained planning professionals in local authorities – a deep-rooted problem hindering an efficient planning system across the country, and in turn slowing down economic development. A key question is whether the government can now provide the resources needed to tackle this issue.
Under Boris Johnson, the Northern Powerhouse and Midlands Engine seem to have greater momentum. This is an issue close to my heart. I am a Northerner and still live in the North. Indeed, Carter Jonas started life outside of London, and maintains a UK wide network. There is so much untapped potential across our major cities, but businesses want to see better transport links, essential public services and office space before establishing a base outside of London.
Brexit will have a significant impact on the rural market and the sector is bracing itself for big change, partly as a result of the phasing out of the Common Agricultural Policy, and partly in response to the considerable challenges of climate change. There will inevitably be winners and losers, but with these challenges come great opportunities for those operating in the rural sector. On balance, and in general terms, the sector seems to accept as necessary the likely reforms that will follow on from the draft Agriculture Bill; particularly the focus on protecting the environment. But there are many areas on which our clients would like clarity, including, firstly, the precise timing of payment reductions during the transition period. Secondly, there is disappointment at the lack of a legal commitment to ensure that new trade deals do not allow entry to cheap, low quality imports.
As we enter a new regulatory era, I expect operational business standards to be subject to greater scrutiny. For example, satisfaction with Environmental, Social, and Governance (ESG) standards is an ever-increasing requirement of investors across all property sectors and is an important consideration in tenders for work. Sustainability has shot up the political agenda and I expect ESG criteria to be integrated increasingly into businesses.
At Carter Jonas, we view 2020 with optimism. With parliament finally unblocked, there really are no excuses for not getting Britain moving again. However, the “Boris Bounce” is fragile and dependent on securing a balanced, competitive and ‘frictionless’ trade deal by the end of the year.
Mark Granger is chief executive of Carter Jonas
