The property sector has been buoyed by the potential for a softer Brexit following prime minister Theresa May’s Chequers agreement.
Following the resignations of hard-line Brexiteers – foreign secretary Boris Johnson and Brexit secretary David Davis – there could be potential for a deal that would see the UK and the EU maintain a “common rulebook” for traded goods.
Such measures would help the construction and development sectors as well as boost the desirability of the country and the City to financial services occupiers.
May is attempting to win full backing for her soft Brexit plan by October, ahead of the last European Council meeting before next March, when the UK is officially due to leave the EU.
However, concern remains that the UK may not break out of a Brexit stalemate as political unrest continues, that May’s proposals will be rejected and that the UK could crash out of the EU with no deal.
‘Good week for property’
Cain International chief executive Jonathan Goldstein said: “From a business perspective, it has been a good week for property. I think it will provide certainty – ultimately business will know where it stands and we will be able to move forward with some degree of confidence.
“I am hoping this takes us on the road to an arrangement with the EU. I believe the country voted for a soft Brexit and that the prime minister understands this and is working towards that. Despite the resignations, it was a good day for her.
“One can only hope that the EU will now back the very strong stance May has taken. If Brussels rejects her new proposal, we will retreat to an absolute stalemate, which we simply cannot afford.”
The greatest fear of business, and property specifically, remains an exit without a deal in place with the EU.
Shaftesbury chief executive Brian Bickell said: “We have this plan but it could all fall apart. This is madness, really. We need to deal with the situation.
“I think stalemate may be an issue. We have got no idea what Europe’s response is going to be, so it is not going to be plain sailing.”
Transitional period
To help ease the inevitable bumps in the road, there is a desire to see a transitional period that would allow the industry to adjust from European regimes to new ones that would be put in place for the UK such as with tendering processes.
Patrick Brown, head of insights and EU engagement at the British Property Federation, said: “Unless the UK reaches a deal with the EU by October, which is the last European Council meeting, we will most likely be in a ‘no deal’ scenario by March.
“One thing real estate needs is certainty and a transitional deal would avoid adjusting to one regime and then a further regime change later on. In contrast, there would be a significant veil of uncertainty as part of a ‘no deal’ scenario.”
Bickell agrees that the current state of uncertainty is weakening real estate business appetite. “It is not just for the industry. We are seeing it in occupiers, who are more cautious to make commitments,” he said. “They are not sure what space requirements will be, which adds to the general uncertainty. Politicians just don’t get it.”
Lack of focus
One thing that all parties can agree on is that Brexit is taking up a large amount of time, energy and resources. As a result, some parts of the property industry have been angered by the lack of focus being given to pressing domestic issues, including fixing the housing crisis.
One senior consultant said: “We need more certainty on the planning system and we need the government to deliver the National Planning Policy Framework quickly. The government needs to focus on the domestic agenda more than on Europe.
“Developers are struggling with a lack of resources and we need more certainty on labour supply. Otherwise we will see bills increase and profit margins suffer.”
Greg Hill, deputy chief executive at housebuilder Hill, added: “With Brexit less than a year away, it’s clear that less of a focus is being placed on other policies such as housing, yet we still lack clarity on immigration and the status of European workers living in the UK.”
Property may be lacking direction from government on both domestic issues and those central to Brexit that will have a bearing on the industry for several years to come, but with the Chequers agreement clearing a path for a potentially softer Brexit, there is at least a glimmer of optimism for the sector to hold on to.
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