Political uncertainty has major ramifications for the industry. Here’s what you need to know from the Conservative Party conference:
1. Property needs to shout louder to get a positive result from Brexit
Skills minister Anne Milton told a private property dinner at conference that the industry needs to get Daily Mail front pages for ministers to listen. The message from government is sectors need to lobby hard for what they need if they want to get heard. Ministers and civil servants, who have been sidetracked by dealing with the divorce bill, citizens’ rights and the Ireland border, say they are now ready to engage more with business. Chancellor Philip Hammond said he wants to hear about specific deferred investments which will help “galvanise” his cabinet colleagues in recognising the urgency of making a transition agreement.
2. It’s getting urgent
The future of 200,000 construction workers and 12% of the City of London’s workforce who are from the EU remains uncertain. Businesses are going to move jobs elsewhere if we don’t reach a transition agreement by the end of the year, according to Catherine McGuiness, policy chair of the City of London Corporation, which lobbies on behalf of the financial services sector around the UK. She said: “Institutions are telling me unless we have clarity in the next couple of months over a transition to give us time to work towards the longer term future… they are going to move jobs elsewhere.” Adam Challis, head of residential research at JLL, who attended the conference, said: “We’re seeing investment being diverted away from the UK towards continental opportunities which look safe and more secure and frankly now with a stronger economic backdrop than the UK. So, the urgency is for that message to get through is now.”
3. Alok Sharma will be the “implementation housing minister”
New housing minister Alok Sharma sees his main role as following the agenda set out by his respected predecessor Gavin Barwell, who lost his seat at the June General Election. “My job is to deliver this,” Sharma said, waving a hard copy of the housing white paper published in February. Giving councils powers to increase planning fees, supporting build to rent and promoting SME housebuilders are among the policies that Sharma plans to implement.
4. Social housing is back on the agenda
Theresa May announced an extra £2bn for affordable and social housing. The money will go towards just 5,000 homes a year over a five-year period but it does represent a significant policy shift. Before the election May pledged to deliver a “new generation of social rented homes” but it later emerged “social rented homes” really meant affordable rent levels at up to 80% of market rent. This time, social housing really means social housing.
5. But home-ownership is not off the agenda….
A £10bn Help to Buy extension announced on Sunday will benefit 135,000 households, which works out as £74,000 for each first-time buyer to get a mortgage with a deposit as low as 5%. Local growth minister Jake Berry said: “I think the Conservatives should stay true to that homeownership dream.” There is a debate about how helpful Help to Buy is to the sector in the long term. Ellis Sher, chief executive of Maslow Capital, said we must ensure “that the continuing demand that Help to Buy sustains is supported by growth in supply of high quality, affordable and well-located housing stock, funded by responsive, flexible capital.” He added: “Without it, we are merely delaying the point at which decisive action has to be taken and which will be needed if the supply imbalance is to be redressed for the long term.”
6. Political leadership is lacking in Westminster, but shining in the regions
The rumour mill at the Midland Hotel in Manchester was abuzz with talk about which ministers were preparing leadership bids in the hope that Theresa May steps down before the next election (foreign secretary Boris Johnson, international development secretary Priti Patel, Brexit secretary David Davis and chief whip Gavin Williamson are all tipped to run if they get the chance). In more positive news, both Labour and Conservative metro mayors were out in force pledging to get on with business while Westminster is blocked by political disputes. Tees Valley mayor Ben Houchen says he hopes to be the link between investors and development opportunities. West Midlands mayor Andy Street said he wanted to share the “growing success story” of the region with other areas. “This is our time to shine,” he said.
7. The door to wider devolution is open
Business, energy and industrial strategy secretary Greg Clark said the first devolution deals were just the start of a process to devolve “more and more power”. His tip to regions was to “make government an offer they can’t refuse”. He said: “It needs to be so compelling that what is being proposed is so clearly in the national interest as well as in the local interest, demonstrated convincingly with the analysis which is available, that actually it would be crazy for the government to stand in your way.”
8. Anger about infrastructure investment in the North of England isn’t going away
The chancellor pledged an additional £400m for infrastructure investment in the North of England – £300m for the rail network, ensuring HS2 infrastructure “can link up with future Northern Powerhouse and Midlands Rail projects” and £100m for road improvements. However, he did not commit to a timeframe of cash for HS3, the proposed East-West rail link. Thinktank IPPR North called the £300m rail investment “a drop in the ocean compared to what was needed and nowhere near the £59bn catch-up cash necessary to narrow the spending gap with London”.
9. The November Budget could offer some break-throughs
The party conference was light on policy announcements, leading to speculation we could have a bumper Budget on 22 November. Adam Marshall, director general of the British Chamber of Commerce called on the chancellor to reduce some of the “upfront costs” businesses are dealing with such as business rates. He said: “If we are worried that the tap is being turned off because of uncertainty then the government should do everything it can to turn the tap back on.” However, Hammond has not offered many hints, only saying that he thought “removing uncertainty” was the best way government could support business.
10. Property needs to get better at communicating its value
Major industry lobby groups including the BPF and the RICS have launched Brexit manifestos, but for government to react it is also important to get the public onside. Phil Briscoe, managing director of Newington Communications, who spent the party conference lobbying ministers in the Midland Hotel bar, said: “While Brexit secretary David Davis pushes on with the negotiations, there is an opportunity to engage with the Department for Exiting the European Union and put the property sector firmly at the heart of the UK position. But there is an opportunity to go beyond this and shape public opinion, through the media and wider political engagement. This also means tapping into a public narrative that is often shaped around the future of financial services, defence or research, and adding real estate to that list.”
Read more from the party conferences >>
To send feedback, e-mail Louisa.Clarence-Smith@egi.co.uk or tweet @LouisaClarence or @estatesgazette
