Commercial Property Could Face Big Hit From New Immigration System

The UK government has unveiled plans for a new immigration system, which a variety of industry bodies have said could pose big problems for sectors within commercial property. 

Under the new rules, which will come into force next year, immigrants will need to achieve a certain number of points in order to receive a visa to work in the UK. The points system will be based, among other things, on having a job offer to work in the UK, level of education and the salary of your job. This is expected to make it difficult for low-skilled workers to obtain a visa.

From the end of this year there will be no free movement of workers between the UK and EU, as a result of Brexit. And so there are worries that there will not be enough low-skilled workers to fill jobs that are important for commercial property. Here are the sectors likely to be affected. 

Construction

The Royal Institute of Chartered Surveyors reiterated a warning that has been put forward by many during recent months, including Sadiq Khan, the mayor of London: A reduction in low-skilled workers would hit the construction sector hard. This will have a particular impact on the housing sector, although commercial development would also be affected.

“The government says it is committed to delivering a million homes by the end of this parliament, but there aren’t enough people to build them,” RICS Head of UK Government Relations & City Strategy Hew Edgar said.

“RICS is working to increase skills and train people here in the UK, but this new points-based system could get in the way of construction companies employing the migrant labourers they need.

“Stopping people who know how to build houses from working here risks ministers not getting the numbers of new homes they want — it’s as plain and simple as that.”  

Retail and logistics

As if retail hasn’t got enough on its plate. Industry bodies said the new regulations would have a big impact on the ability to find workers not just for stores but warehouses and facilities that produce pre-packed food. Under the new system it will be difficult for workers earning less than £25,600 to get the points needed to obtain a visa. That threshold is lower than under the previous system, but still too high for many in the retail sector. 

“Although we welcome the reduction in the salary threshold, it is disappointing that the government has not understood the needs of the economy and the vital contribution of workers supporting the operation of warehouses, food factories and city-centre stores,” British Retail Consortium Business and Regulation Director Tom Ironside said. 

“We continue to call for a system that enables straightforward recruitment from a range of skill levels and avoids significant increases to the cost of employment.

“Retailers rely on complex supply chains and, for these to function effectively, must be able to access an adequate supply of workers. When vacancies cannot be filled from the local labour market, businesses must be able to recruit from the widest talent pool available across all skill levels.”

Hospitality

Hospitality is highly reliant on low-skilled workers. A reduction in available labour is expected to drive up costs for pubs, hotels and restaurants. The restaurant sector in particular is seeing operators head into administration at a similar rate to retailers, leaving big holes in landlord portfolios. 

“Ruling out a temporary, low-skilled route for migration, in just 10 months’ time [this system] will be disastrous for the hospitality sector and the British people,” UK Hospitality Chief Executive Kate Nicholls said.

“Business must be given time to adapt. These proposals will cut off future growth and expansion and deter investment in Britain’s high streets. It will lead to reduced levels of service for customers and business closures.”

Care homes

Swathes of care homes are already closing in the UK, and the sector has seen a large number of debt defaults among the owners of homes in recent years. Part of the reason is that operators are seeing staff costs increase, and the new system is likely to exacerbate this issue. 

“Companies and councils can’t recruit enough staff from the UK so have to rely on care workers from elsewhere,” UNISON Assistant General Secretary Christina McAnea said. “But even with these migrant employees, there’s still way too few care workers to meet demand.”

“The Government has ignored all the evidence about the current pressures on the care workforce — 122,000 vacancies on any given day — and the realities of the challenge of recruiting in a full employment environment and the shape of the current care workforce,” the National Care Forum added.