For The First Time In Decades, Property Is Central To The Fate Of A General Election

Property is always a big topic of conversation in the UK: house prices, the shortage of new homes and where rents are heading. But for the first time in a long while, there is a feeling that real estate issues could decide a general election, and politicians are taking notice. 

An election is highly likely in the autumn of 2024 and must be held by 28 January 2025 at the latest, with the lead-up dominating national discourse this year. Bookmakers feel certain the contest will deliver a Labour government, but however it goes, there could be big implications for property and what property can, in turn, do for the country.

“This is the first election for decades when all the main parties are talking so much about housing, about planning, infrastructure spending and the importance of those things for both growth and also social protection,” British Property Federation CEO Melanie Leech said. 

Leech's remarks came at a roundtable event to launch the BPF’s 2024 election manifesto. The document outlines what the industry would like to see from the next government, be it Labour or Conservative, and how those asks would benefit the country.

Also speaking at the event was a cast of industry chief executives: Landsec’s Mark Allan, British Land’s Simon Carter, Grainger’s Helen Gordon, Legal & General’s Bill Hughes, NewRiver REIT’s Allan Lockhart and Segro’s David Sleath. 

The manifesto covers economic growth and planning, housing, town centre regeneration and the green revolution, as well as points more personal to individual companies, including changes to investment rules that could attract more money to the sector and measures that would boost investment in life sciences and industrial real estate.

But an overarching theme at the event was that both parties are taking real estate more seriously than in previous elections, showing a greater willingness to engage with the sector. 

“I think it's notable that both leaders’ policy speeches [at party conferences last autumn] started with references to property and planning,” Grainger’s Gordon said. 

“We've had, and continue to have, a constructive and increasingly detailed engagement from both government, but also Labour, as they're developing their manifestos,” L&G’s Hughes added. “What we're seeing is that this is about good, sensible policy. And it's refreshing to see both major political parties engaging on the details of the policy and refraining from politics.”

The level of detail sought by the two major parties in conversations with the industry highlight the interest in property, Hughes said. In many cases, party members are preferring to sit down with less senior people because they want to get into the weeds of how the sector could bring about change. 

This sudden interest is a confluence of many factors, but two in particular: The shortage of housing is starting to sway voters. Meanwhile, governments don’t have the money to pay for housing and infrastructure. 

“For the first time that I can remember, we're going into an election cycle where every major party knows they can't raise taxes, knows they can't really borrow more but desperately needs to find growth and productivity and needs investment to stimulate that,” Landsec’s Allan said. “And we as a sector are a source of investment.”

The BPF’s manifesto is split into four sections covering building for productivity and economic growth, building more homes, building stronger town centres and building the green economy.

One perennial refrain of the property industry lies at the heart of the section on productivity and economic growth: reform of the planning system, which BPF claims would accelerate the delivery of homes and jobs while helping meet climate change obligations.

Specific suggestions from the BPF include a new approach to strategic planning that ensures decisions are made at the right level — national, regional or local — and incorporates plans for jobs and critical industrial infrastructure as well as homes.

BPF also recommends defining brownfield urban regeneration sites as a separate planning category, focusing on those opportunities to drive economic growth, and a better strategy for resourcing the planning system. Those resources would come via government investment into local authority planning departments, greater fees paid by applicants for a better service and the creation of central talent pools able to respond quickly to major applications.

“I find the two words that most quickly turn politicians off any further engagement are planning and reform,” Allan said. “But what we've increasingly been focused on — and we're working on with British Land and Berkeley — is how do we focus on brownfield regeneration more specifically, as too often planning is seen as politically sensitive?”

Though not part of the manifesto, Segro’s Sleath called for a review of the greenbelt around London and other major cities to see if there is land within them wrongly classified as countryside where development could be possible. That's an idea that chimes with possible future Labour party policy. 

In terms of housing, the BPF repeated a call for the government to increase its affordable housing subsidy by £9B-£14B, which it said would be matched by £10B of investment from the private sector, unlocking the building of 145,000 new homes. 

It also called for the government to set a target of at least 30,000 build-to-rent homes to be constructed per annum, supported by planning guidance requiring local authorities to plan for market-rented homes and recognition that new build-to-rent homes add to net housing supply and should be exempt from the Stamp Duty Land Tax landlord surcharge.

Current government housing policy has coalesced around two forms of housing, homeownership and social housing, leaving sectors like BTR excluded, Gordon said.

“The solution to our housing problem is around all tenures, including build-to-rent,” she said.

Hughes said the BTR sector is still nascent and often misunderstood by central and local governments. But when a local authority has experience of a BTR scheme being built in their area and creating a positive addition to the housing supply, gaining approval for future schemes is easier, he said. 

Setting an annual target of 30,000 BTR homes would also require greater understanding at a national government level. The biggest year of BTR delivery was just over 14,000 units in 2019, but with 50,000 units under construction and 110,000 in planning, 30,000 a year is an achievable target, Gordon said. 

A key theme running throughout all four sections of the BPF manifesto is helping the real estate industry become a cornerstone of a greener economy for the UK. And there was one big industry ask for the government: clarity. 

The BPF is asking for clear long-term market signals on minimum energy efficiency standards and in-use performance ratings. The government has decided to review whether to implement minimum standards of building energy performance over the next six years, a delay that has created uncertainty and could postpone investment into creating greener buildings, it said.

The same call was made in regard to embodied carbon and how local authorities should view demolition and construction of new buildings compared to retrofitting existing buildings when it comes to the amount of carbon the two strategies emit. 

“We need to have more clarity and more guidance to our planning authorities around thinking about whole-life carbon assessments,” British Land’s Carter said. “Otherwise, it can be driven by emotion that you shouldn't knock down buildings. But sometimes you should knock down a building to create a much greener building. Other times, absolutely, you should try and retrofit.”

On top of this, the BPF called for changes to real estate investment trust rules to allow different types of assets to be included, allowing for the creation of solar REITs or wind power REITs. 

As for how closely these priorities align with the manifestos of the two main parties, the assembled group was coy. But Landsec’s Allan ended on a positive note. 

“The most relevant thing I can say is that the discussion we have with the current government and the discussion we have with the opposition are the same,” he said. “And that, for me, is what gives me the confidence that there's traction here. We haven't got one party or other moving in a fundamentally different direction. And that, for me, is grounds for optimism.”