The real estate sector will welcome the stability, at least in the short term, that such a decisive election result brings. Jackie Newstead, our Global Head of Real Estate, predicts a post-election bounce in investment following a return of confidence to the market and a busy Q1 in 2020. Deals which were on ice can be resurrected and pent-up investment unleashed. So, what key policies lie in store for the real estate sector?
One thing is clear: Brexit will be a top priority. The government has promised to start pushing the deal through Parliament before Christmas and leave the European Union in January 2020. But there are many hurdles still to cross. Not least is finalising a new trade agreement before the implementation period runs out at the end of December 2020.
The nose dip in retail values has reflected the increasingly broken high street. Vacancies have hit their highest rates since 2015, with more than one in ten shops sitting empty. Retail insolvencies are at a five year high, up more than 30% compared to the year before the Brexit referendum.
There is a glimmer of hope at least in the fact that it was a Conservative manifesto pledge to overhaul business rates to help revive the high street. But for those retailers, restaurants and leisure outlets struggling with waning consumer confidence and a squeeze on discretionary spend, an end to Brexit uncertainty can’t come soon enough.
The Conservatives have promised a million homes in the next five years with affordable housing high on the agenda. Boris Johnson will encourage councils to use planning contributions to discount homes by a third and will produce a social housing white paper outlining further reform.
The Conservatives are committed to continuing their programme of leasehold reform including a ban on the sale of new leasehold houses, restricting ground rents to a peppercorn and strengthening consumer redress for tenants.
Private rented sector
The government will repeal section 21 of the Housing Act 1988 and effectively end the assured shorthold tenancy regime and so called “no fault evictions”. This means that landlords will only be able to obtain possession of their property in specific circumstances and not automatically at the end of the term. In compensation the government would strengthen rights of possession for landlords. Also on the agenda is a commitment to one “lifetime” deposit which moves with the tenant.
A stamp duty surcharge on non-UK resident buyers will be introduced. This will apply to companies as well as individuals. The 3% charge has been increased during the election campaign from the 1% originally suggested. Further detail on this will be awaited with interest.
Another five years
With some pertinent proposals and a personal guarantee to get Brexit done in January it will be interesting to see just what gets unleashed in the months and years to come and how the real estate sector responds.
Although we now have a clearer road-map of the future and anticipate a return of confidence to the market, the post-election feel good factor may be short-lived if the Conservatives can’t negotiate a trade deal by the end of December 2020 in which case we may be facing another cliff edge this time next year.
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