So we now know who the new mayor of London is, but not the outcome of the EU referendum.
These milestones, along with local elections across the country, have dominated headlines for the past few months and kept the property sector on its toes as it considers the potential business impacts. And there is much at stake.
Will new mayor Sadiq Khan be able to fix London’s housing problem? Certainly not alone. Can the former London mayor take us out of the European Union? Not without the support of the electorate. Meanwhile, the property market is at something of a standstill as we await the referendum result.
Yet while these are significant political events, it is important to step back and consider the wider story of societal flux which business is currently struggling to come to terms with.
For years, the UK’s stability has been the bedrock of its attractiveness to global investors. Not much happens here and investors like that, together with our stable tax regime, rule of law, social cohesion, and broadly consistent politics.
However, with the reasonable exception of the rule of law, many of these are at risk, with profound implications for the environment within which the property sector assesses risk and allocates capital.
Consider our once-stable two-party system, a defining characteristic of our post-war democracy. While parts of the electorate are increasingly disengaged, others have rallied to new causes and fresh political movements. As frustration mounts with a political system that many think doesn’t reflect their views, and an economy that isn’t making most people better off most of the time, less consensus and more disruption is inevitable.
This is making politics far more unpredictable and has a direct impact on the political environment in which business operates. Whether that’s from the increased use of referenda (three in the past five years), policy decisions outside traditional party lines, such as the recent Budget announcement on property tax, or the increased use of direct engagement tools, such as online petition platforms like Change.org.
Alongside this, our housing market is no longer fit for purpose with profound ramifications for generational wealth inequality and social stability. We march to the drum of home ownership, yet this is increasingly out of reach for most people. The UK is building only half the 240,000 homes we need per year and affordability is worsening. This will ultimately undermine social cohesion, our economic competitiveness and ensure that companies struggle to recruit talent and drive innovation.
With all this set against a backdrop of climate change, global economic shocks, technological and demographic change, it is clear that the business community has to adapt to the idea that uncertainty is the new norm. These shifts are not blips. While the property market may continue to operate in cycles, we are naïve if we think there is a “normal” to return to.
This might all sound a bit, well, uncertain, but this flux also creates a vacuum and therefore an opportunity for our sector to tell a compelling story that resonates with people and politicians alike. We need to use our sector’s institutions, such as the BPF, to talk with a more powerful collective voice and press home the property sector’s wider contribution, from creating world-class places to connecting local people with employment opportunities.
With greater unpredictability, we can’t assume anything is off the table. And as businesses with a long-term interest in the continued success of the UK, we have to look through the uncertainty and demonstrate how our investments and developments are shaping the country and helping meet some of its most fundamental challenges.
Paul Clark is chief investment officer at the Crown Estate
