While Sajid Javid’s resignation as chancellor has stunned many in the property industry, some believe his replacement could shine as a champion for investment into the UK.
Rishi Sunak (pictured), the 39-year-old chief secretary to the Treasury and a former analyst at Goldman Sachs, has been appointed to the role. And with less than a month to go before the Budget, he certainly has his work cut out.
The consensus is, however, that there is still enough time between now and the Budget for Sunak to create a credible platform for change for the industry.
Melanie Leech, chief executive of the British Property Federation, told EG: “I don’t think anyone was expecting the chancellor of the exchequer to resign. Obviously that was a shock. But Rishi Sunak is an experienced Treasury minister, so there is some continuity there. He will have been focused on the public expenditure side, rather than the Budget, primarily, but he is clearly a senior member of Sajid Javid’s team.
“It is important he stamps his authority on the Treasury… and that he delivers the right Budget to maintain investor confidence and stimulate the investment we need across the country. Real estate is the key partner to him in that.”
Can Sunak fix it?
Savvas Savouri, partner and chief economist at Toscafund Asset Management, hailed Sunak’s appointment as “great news” for real estate, and a “phenomenally strong signal” that prime minister Boris Johnson “means business”.
He points to the pound’s performance, which made a quick recovery after a dip caused by Javid’s departure.
“We’ve got an upgrade in the chancellor,” says Savouri. “He understands commerce, he is educated to a high level, he has experience in investment banking, and he knows politics.
“Most importantly, he has the opportunity to fix what was damaged by [former chancellors] Osborne and Hammond, not least in residential – he could remove the surcharge on stamp duty, which is an easy give. He could change business rates.”
Savouri added that the groundwork can now potentially be laid for the next decade of projects, now that there is a government in place that is not jeopardised by coalitions or a small majority.
He said: “This is the first step in the evolution of how we tax property, both residential and commercial, and make it more appropriate for the 21st century, for a time when you have sheds in the countryside that are generating much more revenue than they pay tax for, and plots of land on the high street that are overpaying. The way we tax both households and businesses is appalling.”
Notably, Sunak, a Brexiteer who also previously worked for a hedge fund, was also a Fulbright scholar at Stanford University in the US. His wife is Akshata Murthy, the daughter of Infosys founder and billionaire NR Narayana Murthy.
Walter Boettcher, head of research and economics at Colliers International, said: “I don’t know much about the new chancellor, but he is well-educated, has connections with the US, is entrepreneurial and presumably understands technology – he ticks a lot of boxes in terms of strategies Boris Johnson might be contemplating, perhaps more so than Sajid.”
Now that large Asian companies and funds investing in UK real estate are increasingly seeking opportunities in other asset classes, Sunak’s diverse background may also stand him in good stead when it comes to navigating the subtleties of these relationships.
“For UK commercial property, the hope is that the new chancellor is sensitive to commercial issues affecting the sector,” said Boettcher. “He may have a good sensitivity for accommodating cross-border investors.”
‘10 in 10’
Sunak’s appointment has overshadowed the rest of Johnson’s reshuffle, which kicked off with the departure of housing minister Esther McVey.
Her sacking will put the government on its tenth housing minister in a decade – leading to many calls for an appointment that can get to grips with the mandate and deliver results.
Leech said: “There has been something of a revolving-door of housing ministers. We are really hoping that a government with a strong mandate and prospect of stability can now put the right people into key roles and provide some continuity.
“Let’s have some stability in key roles, so that we can build the public-private partnerships necessary to get investment objectives and opportunities aligned, and that they can get to drive and follow things through. That would be a welcomed change in some key portfolios for [real estate].”
Nick Sanderson, chief executive of Audley Group, said: “It’s now 10 in 10 for housing ministers. Ten changes in 10 years, and 19 in 20. Hardly surprising that short-termism remains the order of the day.
“A lack of understanding of the real issues continues to lead to sticking-plaster policies like building more houses. If a change does need to be made, it should be meaningful: bringing together housing, health and social care under one banner would be a genuinely radical shift towards solving issues at their root.
“The government must act now and work with the industry to change the narrative on housing and find solutions before the pressure on the system boils over.”
Other high-profile departures in the reshuffle included Andrea Leadsom, who has been sacked as business secretary. She has been replaced by Alok Sharma.
Those retaining their jobs include Robert Jenrick, who remains in his role as secretary of state for housing, communities and local government.
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