General Election – Rap-Up

Last week’s General Election result means we have a new Government, but how will this impact property? Based on what we know so far, our experts have looked at potential pros and cons across the Commercial, Residential, Planning and Building disciplines and provided our thoughts.

COMMERCIAL

Investment market – Rebecca Harper, Head of Investment at Rapleys

Whatever your politics, the fact there is a Government in place that has a clear mandate to run the country must be a boost for UK investment after the last few years of uncertainty. While we wait to see what immediate actions from his list Sir Keir will prioritise – planning, business rates reform, housebuilding being the areas that most directly impact our sector – investors will find confidence in stability and may take decisions that perhaps they’d been holding out on until now.

Business Rates – Nik Moore, Head of Business Rates at Rapleys

Now we officially have a Labour Government, the property industry awaits news of what the promised new, fairer business rates system will look like. Reform of this tax should be urgent and wide reaching to remove the burden that threatens smaller businesses and the future of our high streets. Given Sir Keir Starmer noted that his new system would yield the same revenue, we have some concerns about how robust it will be. The current process has already been reviewed numerous times and given the size of the tax take, the reliability of the income stream, the exceptionally high compliance rate, and the ease and low cost of collection, it will be hard for any really meaningful change to happen but we hope the Government stick to their word and not only reduce the disparity and hardship for small businesses but incentivise entrepreneurship too.

PLANNING

NPPF in first 100 days & Grey belt – Robert Clarke, Head of Planning, Jason Lowes and Kieran Rushe, Planning Partners at Rapleys

“Brownfield first” has been a mantra in planning for decades, yet, beyond changes to the permitted development regime, the last major national attempt to simplify the planning application process for brownfield land was the introduction of Brownfield Land Registers, which seven years on have proved to have limited impact on the delivery of development. In this context, the most eye-catching part of Keir Starmer’s development focus is promoting housing in the “grey belt”, the second of his so-called five golden rules. However, Labour will need to put a lot more meat on the bones to convince both the general public and developers that their proposals will really make a difference. For developers, there needs to be much more detail as to how the grey belt will be defined, and how the swathes of disused car parks and poor quality wasteland they cite will be “fast tracked” without being impeded by costly delays and appeals. However, if these plans are implemented in the spirit that is apparently intended, then the grey belt could hold very real opportunities for developers and the delivery of housing.

There has to be an acceptance in 2024 that the grey belt isn’t rolling fields. It also has to be recognised that development sometimes generates significant opposition from local communities. This is why the development of crucial infrastructure such as data centres, transport, renewables and telecommunications have faced delays and opposition despite their general necessity being broadly agreed with. A vocal section of the population just don’t want them developed near their homes. Labour’s job will be to persuade the part of the population which is more open to development in their local area, recognising that new attainable housing and places to work are key to the health of their community. We need to build sustainable places and communities, and this means employment land too – that’s where jobs come from after all, and the manifesto is also about growth and supporting people to own their own homes. Employment land has been missing in action from the NPPF for a while now, so it’s disappointing not to see Labour focusing attention on it, especially if they are keen to update it quickly as they say. Hopefully, the promised updates will include some weight in favour of this when they do review it.

300 new planners may help with the staff shortages many local authorities are reporting, but at a national level this is less than one per local authority in England and Wales, and how quickly could these new planners be found? Even if they were able to start on day one, it will also take time to understand and roll out whatever NPPF changes are to be made. And, if more intervention is going to happen, the balance between central and Local Government needs to be clear.

For the rest of Labour’s promises, the jury will be out until the detail is published. For example, putting targets back into the NPPF is a positive step, but – as a measure on its own – this doesn’t deliver the housing the country needs. Whilst cross boundary strategic planning and a focus on combined authority power sounds good this is already happening in parts of the country, so what is Labour going to do differently? Hopefully we won’t have long to wait as the new NPPF is expected later this month.

RESIDENTIAL

Housing – Nick Fell, Head of Residential, Angus Irvine, Head of Rapleys Living, Simon Corp, Partner in Affordable Housing and Mat Shenton, Head of New Homes.

Perhaps the biggest focus for Labour is that of housing, and affordable housing at that. They have promised the biggest increase in social and affordable housebuilding in a generation, with an absolute prioritisation of social housing for rent above all other development. This will involve including land released from the grey belt, delivery of more affordable homes from existing funding, empowering local authorities and housing associations to build their capacity and making a greater contribution to affordable housing supply, ensuring housing developments go to local people first, intervening centrally when development is locked and tightening obligations for developers to deliver more affordable homes.

Clearly the property market wants to deliver more affordable homes – including developers and, of course, Housing Associations. The want is there but the ability, and practicality, is not always there too. Binding targets and strict obligations are all well and good but that doesn’t solve the problem. In fact, it may just contribute to it. 

40% of nothing is nothing and if development is not viable due to rising costs and an increasing need to give even more homes away as part of the deal, development may not happen at all. That’s not going to support the delivery of any housing, affordable or not. There must, somewhere, in this be a sense of practicality so that local authorities can make local decisions on whether a site can be brought forward without 40% affordable housing if it’s in the best interests of the local plan and the area it serves. Sticking to wide sweeping statements over practicality will hold up sites at best and render them unachievable at worst. More attention needs to be paid to how these sites can be viable and instead of penalising developers, think about incentivising them so that they are motivated to think up more innovative ways of delivering. For example, the protection of new build social housing needs to be supported by grant funding even on s106 restricted units to bridge the viability gap generated by increased construction and finance costs. The delivery could also be increased by larger scale land release through the exceptions planning rule so planning restricts it to an affordable housing use in addition to general allocations. This will need to be thought about, particularly with the grey belt idea.

Focusing on local buyers for new developments first is a well-intentioned idea. However, this shouldn’t lock out buyers from elsewhere either. Not all local communities can afford to buy and by hammering house prices, people already with mortgages who are struggling will struggle further. We have heard countless tales of mortgage prisoners up and down the country. What if these people find themselves having to potentially sell and go back into rental? This will increase housing waiting lists further as rental levels grow and that will once again affect the buying market. Intervention is not always a good thing.

We also expect a flurry of First Time Buyers who will scramble to purchase before the stamp duty threshold returns to its permanent position next year. This could be a welcome short-term boost for housebuilders who have units that are empty or nearing completion. However, in the medium term, while we are waiting for the promised delivery of 1.5m homes, and for interest rates to finally move down in any significant way, the market will continue to prove difficult for many buyers.

BUILDING CONSULTANCY

Simon Harbour, Head of Building Surveying and Partner in Building Consultancy at Rapleys

There are some nuggets of hope in the building and construction side of Labour’s pledges with Awaab’s Law being extended to the private rented sector to protect tenants from mould and damp and the promise to upgrade 5m homes in 4 years, it’s disappointing not to see other funds being pledged towards Asbestos and reinforced autoclave aerated concrete that have blighted so many public sector and older buildings and threaten the safety of our children and social housing tenants.

Talent in the industry is another critical issue. With fewer construction workers, we need a real push for the apprenticeship system to provide a proper pipeline of skilled workers in the industry, particularly given the amount of builders that have left the country post-Brexit.

All of these issues require an in-depth collaboration with the private sector so that our expertise can help effect positive and far-reaching change which is key to the practicality of all of the other promises Labour has made. 

INFRASTRUCTURE

Shaun Butcher, Utilities Consulting and Brittany Marsland, Associate at Rapleys on Utilities

When it comes to utilities, this is also holding back our development pipeline as critical infrastructure is delayed by years due to being unable to connect to the grid in some locations and have a sustainable water supply in others. Sir Keir Starmer has focused on self-sufficiency to help this problem, through the establishment of Great British Energy, but the short-term will still see ongoing issues which will not help the delivery of 1.5m new homes.

Huge consideration should be given to advancing utility networks right now and that includes water supply. Too often utilities are a later concern and, if a proper strategy isn’t put in place from the beginning this can cause delays and extra cost to sites which can threaten the very viability of them in the first place.

We are already seeing some regions showing signs of struggle in terms of electricity and water capacity and supply and we have seen serious issues in various locations from long time periods and high costs for reinforcement works which are required to upgrade our electricity infrastructure, to waste and flooding to quality and availability of supply. Anglian Water has already outlined its concerns for Cambridge, which they said was at ‘significant risk’ of water shortages due to development and climate change with rising temperatures and low rainfall coupled with a major population increase posing challenges to water supplies.

Around 3 billion litres of water is lost every day due to leaking pipes alone. Despite half-hearted fines from the previous Government, there doesn’t appear to be any roadmap or accountability on behalf of the water companies and this must be tackled, especially when sizeable dividends are still being paid to those in charge.

Another solution is to build more reservoirs to store water. This activity has tailed off somewhat since the privatisation of water companies around 1989 and thereafter. Perhaps accountability and incentivisation vs fines can be linked to those reinvesting profits into building reservoirs and subsidisation for those that commit to better practice. Either way, this will take time. 

In reality it will take a restructure of planning and a number of other initiatives to solve this problem, it’s not a simple solution and it will take time. But if we start now, the delivery of much-needed housing won’t find itself failing before construction has even commenced.

Richard Huteson and Jonathan Harper, Partners in Planning at Rapleys on Renewables

The new Labour Government has declared a focus on renewable energy with a drive for self-sufficiency in the UK and an immediate u-turn on onshore wind farms. However, the substance behind these is missing and we fear that a comprehensive strategy that covers energy and the infrastructure supporting it has not yet been put together.

The grid is at capacity, it cannot take any more electricity and its infrastructure is unable to cope with distributing it either. We can generate electricity via renewable sources but unless it can be distributed, it will have nowhere to go. 

New housing developments are finding themselves delayed thanks to lack of connectivity as it is, and Labour are planning 1.5m more homes over the next parliament. The UK will simply not be able to cope with the infrastructure as it is today.

Battery storage is both expensive and not widespread for the amounts we would need to support major projects – even the majority of people who have solar panels on their roofs still need to be connected to the grid. We need major storage plants that, until now, have been complex to achieve allocation and then planning for. Hopefully Sir Keir Starmer will change that through the revised NPPF later this month – after all it wasn’t covered in the most recent one by the Conservative Government.

In the meantime, Rapleys are working on solar farms up and down the country where planners are overcoming challenge after challenge to get consent. Again, if this was made easier thanks to a planning overhaul, then we can start moving in the right direction – but a mass overhaul of the current infrastructure in order to distribute the electricity generated is a critical and urgent requirement.

So the aspirations are there, which is great, but we need to see that the practicality is also there to deliver it otherwise both energy and housing promises will find themselves lacking.