The British Property Federation has launched a five-point manifesto to communicate the sector’s post-Brexit priorities to government.
Its demands are straightforward and familiar: maintaining business confidence; providing stability for the tax and planning systems; encouraging infrastructure investment; retaining access to construction skills; and supporting housing supply across all tenures.
Will government listen? “Recognising that the government has got a lot on its plate, and getting its attention on some of the things we’d like to talk about is probably going to be quite challenging, so we’re just trying to boil it down to five really key asks,” says David Sleath, BPF president and chief executive of SEGRO.
The BPF will lead the industry’s Brexit pitch to government over the next two years through its regular meetings with Number 10, the Treasury, the Department for Communities and Local Government and HM Revenue & Customs. So it needs to make a clear case about how property contributes to the wider economy.
“We are a huge economic driver and employer,” says Rob Noel, chief executive of Land Securities. “If I take my business, over the past five years we have spent £3bn speculatively in developing 3m sq ft of offices in London and two shopping centres – one in Leeds and one in Oxford.
“So that would have employed tens of thousands of people in the supply chain, and we are now not starting speculative development, because our customer, the UK retailer, the international retailer…does not know what its trading environment is within the UK.”
The stakes are high. Maintaining business confidence underpins the whole market, Noel says. “Our whole market, which makes up [around] 6% of GDP, depends on a healthy demand. And if we don’t have that, we won’t build,” he says.
Paul Brundage, BPF junior vice president and Oxford Properties’ executive vice president, senior managing director, Europe, says: “We made a decision, as a global investor, when I came here, nine years ago, that the UK was going to be arguably our first and our number-one market outside Canada…[Now] all of those things that were the conditions for why we did it are at risk.”
High on the agenda is ensuring there are no sudden tax changes, which will cause greater uncertainty and scare off investors. Hammerson chief executive David Atkins says: “If the government is really committed to infrastructure in its wider state, real estate included, then it’d be putting tax breaks in our sector, not increasing stamp duty, which is what it has done.”
He is concerned about tax changes that “come out of the blue.” “We know nothing about tax changes, which to us means that government hasn’t really done its homework, that it doesn’t look at the wider consequences of those changes. It is certainly not consulting and it just thinks real estate is an easy target. It has not thought through the impact on investment and particularly job creation.”
Brockton Capital co-managing partner David Marks says the industry needs to point out to government that large developments, which can employ construction workers from 20 different nationalities, could be at risk. If access to skills becomes more difficult, international companies such as Facebook and Apple could decide against locating large offices in the UK, he believes. “If there’s a threat to that, that’s a real threat,” he says.
It’s not all about London. “I think it’s more important for government to recognise the fact that we can play a key part in the success of the UK, be it GDP growth, productivity growth, employment or better productivity from non-London parts of the UK,” says Legal & General Investment Management head of real assets Bill Hughes. “Because that’s probably one of the most clear untapped potential elements of the UK that is beginning to take shape.”
Should the manifesto be more detailed? BPF chief executive Melanie Leech says it’s not about how the government delivers on the industry’s concerns, it’s ensuring that it delivers. “The points of principle that are important to us, around business confidence, around access to talent, we’ve articulated. What we’ve not tried to spend much time doing is thinking about how government is going to deliver those things for us…because frankly, we’d have a limited ability to influence that.”
For now, greater certainty on whatever the government decides is the industry’s priority. The Supreme Court’s decision today ruling government must seek parliamentary approval to trigger article 50, which prime minister Theresa May had hoped to do by the end of March, could delay the process.
“The timeframe’s the killer,” says LandSec’s Noel. “We’ll look back on this in 20 years’ time and this will have been a blip. But rather it be a short blip than a long blip. Whether the UK is in or out of the EU in 20 years’ time we will have found our way and the world will have moved on and have found its place. The trouble at the moment is that we don’t know what that place will be and that lowers the propensity to invest.”
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