Our election pledges for the Real Estate sector

Reading the manifestos from all of the major parties, it is clear that Real Estate is a central issue that any future Government is going to need to address. 'Housing', 'Planning', 'Sustainability' and 'Business Rates' are common buzz words across the manifestos for the main parties. Establishing how we want to use space, connect those spaces through infrastructure, create communities and support development across the country is fundamentally tied to our built environment and therefore the politics around it.

We have set out below a list of our main pledges that we would like to see addressed to ensure that the landscape of our Real Estate continues to evolve and develop.    

1.Consistency and a future roadmap of fiscal policy

Real estate is by its definition a capital expensive asset therefore businesses in this industry are looking for consistency and long-term thinking from the next government. Short-term changes in Stamp Duty Land Tax (SDLT) rates do nothing to unlock the long-term property market and historically have only lead to peaks and troughs in the market supply.

A provisional roadmap from the next government on where tax and planning processes are heading would allow businesses to commit more to development and investment. There are also a number of areas that tax could be easily reformed – the most obvious candidate being Business rates. These need reforming and should be distributed fairly across the asset classes - there is too much of burden on the high street and reliance on valuations in determining the charges.

Simplification of taxes would also aid businesses. For instance, is the Annual Tax on Enveloped Dwellings (ATED) regime still required, given the disproportionate number of reliefs claims that have to be made by each property owning company with a residential property of more than £500,000?

2. Housing

No matter which political party win the next election, housing will continue to be high on the agenda. We would hope that the next government promotes public/private sector engagement to open up new developments. The government could also look to provide additional support in developing the Build to Rent sector – for instance allowing capital allowances for investments in such buildings, as there are currently none for this sector. Abolishing the Residential Property Developer Tax (RPDT) would also make sense, as this is a fiscal disincentive for larger businesses with more than £25 million of profits (before interest costs) from developing residential property, arising due to the 4% surcharge. At a time when housing is required, this seems nonsensical.

3. Net Zero by 2050

25% of the carbon comes from our built environment and over 80% of our built environment anticipated in 2050 already exists. The next government should think about expediating planning requirements in respect net/low carbon projects, or providing tax incentives for investments made to improve the environmental rates of these existing buildings – ideally using established industry standards. This could, for example, be undertaken as “above the line” tax credits similar to those currently provided for R&D.

Given changes in our retail spending, many towns’ high street retail space is under utilised, but there are a number of challenges in repurposing assets. There is no doubt that some of these properties could be repurposed for housing or hospitality/commercial space, creating new communities. The government should support this by offering further grants/incentives for repurposing such assets as well as for brownfield sites. There remains a skill gaps and therefore additional support to promote training the skills required for environmental retrofitting would be hugely beneficial.

4. Access to finance

Given the current average house prices, greater support for first time buyers seeking to get on the ladder would provide many with the help they require to obtain home ownership.

The next government should consider increasing access to and raising awareness of support for businesses continuing to struggle following the interest rate increases. This will help to promote the UK as a place for global investment. Providing more flexible and alternative finance options could also help housebuilders particularly Small and Midsize Enterprises (SMEs).

5. Planning process

The planning process desperately needs reforming. A quick win to streamline the process would be to appoint more planners and officers at the UK Land Registry (currently it can take up to two years to register title) which slows transactions as changes take time to be recognised. To assist with streamlining the process, the next government should allow for more devolved decision making in the local communities. For larger schemes, there are tax impediments in amalgamating land interests in one place – land pooling is not straightforward and therefore, if a fiscal policy could be created to remove these impediments, this would facilitate larger schemes.

6. Skills and training

As noted above, the next government should support skills training in retrofitting and support more planning. Programmes to raise awareness and provide greater encouragement to those from different backgrounds to join the sector would also be beneficial. There should be greater incentives for businesses with structured training/apprenticeship schemes.

For more information on the issues raised in this article or if you have any questions, get it touch with Caroline Fleet or your usual Crowe contact.