Real estate looks to ‘game changing’ government as Labour sweeps to power

Real estate leaders are hopeful of a “game-changing” new government after Labour achieved a landslide in the general election. By early Friday morning Labour was on course for a huge majority, with the Conservatives’ Rishi Sunak having conceded defeat to Keir Starmer. William Beardmore-Gray, senior partner and group chair at Knight Frank, said: “We are hopeful that this election result ends the long period of political uncertainty which has negatively impacted the real estate sector. Both our domestic business leaders and those considering investing in the UK need a stable policy footing that addresses a myriad of challenges.” Etienne Prongué, UK chief executive at BNP Paribas Real Estate, said Labour had made “potentially game-changing pledges on business rates and planning reform, as well as outlining a bold vision for unlocking private investment across the UK”. “The UK economy is now in a better position to benefit from the looming normalisation of monetary policy and inflation,” Prongué added. “Arguably, there has long been a recognition that UK assets are discounted relative to other markets, but that political uncertainty and anaemic growth meant this was justified. Now, household incomes are rising, the short-lived recession is behind us, and business confidence is improving. In turn, the tone of my discussions with clients is noticeably more upbeat. Investors can see the dislocation between real estate pricing and the leasing market fundamentals and are encouraged by lead indicators pointing in the right direction.” Much attention will now be paid to the Labour Party’s promises on the country’s housing crisis. “Labour’s Housing Delivery plan sets out bold targets: 1.5m new homes, with a focus on 90,000 affordable or social housing units each year,” said Nick Walkley, principal and UK president at Avison Young. “To get land ready for building and boost affordable housing, Labour needs a revamped approach to capturing land value. This calls for collaboration among local authorities and stakeholders.   “Big housing projects take time, even when everyone’s on board. Labour wants to speed things up by streamlining how funding is approved, especially by involving private companies. They also plan to make compulsory purchase orders quicker and easier, so they can start building sooner. It’s a balancing act: Labour wants to solve the housing crisis fast, but large projects come with delays.”  Helen Gordon, chief executive at Grainger, said: “We look forward to working with the new Labour government to support them in achieving the delivery of 1.5m new homes, while driving economic growth nationally. We are optimistic that with the new government in place, now is the time to move forward with implementing measures to improve standards for the 5m-plus rental households across the UK, creating a better experience for renters, whilst supporting landlords, and encouraging investment into more much-needed high-quality rental homes.” Some noted a change in attitude from the industry towards Labour over the course of recent years that will now be tested as the party comes to power. Andy Hay, chief executive of consultancy Hollis, said: “Five years ago those investing in the real estate sector were hesitant at the idea of an overly left-wing Labour Party coming into power, but the sentiment from most seems different this time around. Investors from the UK and oversees will be looking on with interest to see how the market reacts initially, as well as what early signs come out of Downing Street regarding economic stability. The prime minister and the new chancellor will know that the worst thing they can do is do something to reduce the trajectory of the economy, which should hopefully mean that the real estate sector is able to grow.” Hay added: “While many of Labour’s early plans focus on housing and planning, they are likely to have a knock-on effect across the real estate sector. Almost every panel debate I have attended in recent years has included a call for government and local authorities to take actions that will help speed up the planning process for commercial and residential development. The manifesto pledge to appoint 300 new planning officers will make a difference, but this is unlikely to happen any time soon.” Now the industry will wait to see which MPs are given the new government’s real-estate-facing roles. “Real, meaningful change requires long-term stability,” said RICS chief executive Justin Young. “Regardless of who is assigned to key positions across our sector, they must be given the time to executive their mandate; one of the reasons why we have seen such a lack of progress in housebuilding and construction is because we’ve had 16 housing ministers since 2010. Saghir Hussain, director of architect practice Create It Studios, said: “Above anything else, I look forward to seeing who will be representing housing and planning in the cabinet. Then hoping it will still be the same person in six months time, because the industry needs consistency. Having seen 16 housing ministers be appointed in 14 years, Labour is going to need to treat the role as an important one if it is going to achieve what it has pledged to do in its manifesto.” Photo © Jonathan Hordle/ITV/Shutterstock