British Property Federation

The current pandemic has meant the light hasn’t been shone so much on the potential challenges and opportunities surrounding Brexit. Ahead of our event later this month – titled Property Sector Opportunities in a Post Brexit World – we’ve been speaking to Ian Fletcher, Director of Policy and the British Property Federation…

Q. What is the impact on the real estate investment sector emanating from the UK’s exit from the European Union?

Most of the impacts on the real estate investment sector are secondary effects. Some businesses require less space because of Brexit. More generally, slower growth normally means fewer space requirements, although it is difficult in current circumstances to disentangle that from the effects of the pandemic. The other major secondary impact is on the construction supply chain, both supplies and labour.

Q. What are some of the negative externalities of Brexit that have impacted on firms in the Built Environment?

The kinds of things we are picking up are mainly construction supply difficulties, everything from roof tiles to steel. Also, some labour shortages, plasterers for example. As a nation, we are also strong in exporting our real estate services sector and we have concerns about some barriers to trade in exporting those services.

Q. Brexit has transformed many aspects of the UKs economic relationship with the EU, what are some of the most significant impacts on your members in this new relationship?

The main issue for our members will be ensuring their supply chains are more resilient. That may mean more local sourcing, greater adoption of modern methods of manufacturing, and perhaps greater supply chain investment in skills.

Q. How has the end of the transitionary period and the agreement of a post-brexit deal changed the investment landscape for the UK?

Investment in real estate is global and so our exit from the EU is not a game-changer. Many of the advantages the UK real estate sector has in terms of a well-regulated market, competitive taxes, skilled labour, and demand for space, remain whether we are in or out of the EU. Factors like overseas capital controls, political instability or changes in taxation policy are more likely to impact on investment in the sector than Brexit.

Q. Are there outstanding issues emanating from the deal struck with EU that will impact British Property Federation members?

Important unfinished business for our members is the negotiations that continue over financial services and the work between the EU and UK Government over a memorandum of understanding on that sector. As a third country, our financial services sector could find it more difficult to operate in EU markets. The consequences could be more financial services sector jobs migrating to the EU, impacting demand for space, and more difficult access to EU markets for UK funds.

Q. What impact has the end of transitionary period had on the real estate sector, and are there opportunities that come with Brexit?

It was positive for the sector that a deal was reached. Ultimately, our sector is a touchpaper for the wider business community and if they are struggling then that tends to flow through to their space requirements. There are some opportunities for the sector around the fringes of Brexit. For example, Government is already considering simplifying some environmental requirements as part of its Planning White Paper. EU law also impacts on how public land is used for development and there is an opportunity to improve that procurement process.

Q. What is the British Property Federation most anticipating about the Property Sector Opportunities in a Post Brexit World Event?

The real estate investment sector has many challenges at present and Brexit probably does not feature in the top ten issues that we are prioritising for 2021. The pandemic has had a huge impact on the customers of our sector. Many businesses are not occupying their space at present, struggling to survive and unable to pay their rents. How our sector copes with that and an exit strategy from it is priority number one. Beyond that there is tenure reform in commercial, residential, and long leasehold to contemplate, major planning reform, the building safety agenda, our climate change commitments as we head towards COP26, possible business rate reform, and for us all, how we pay for spending on the pandemic.

Opportunities-wise, our towns will need significant new investment as we reshape how retail space and offices are reused post-pandemic. There will also be local opportunities created out of our new relationship with the EU, for example the Government’s Freeports policy.

Our members provide all forms of real estate to rent, and whilst some sectors have suffered, others have thrived during the past year, for example, distribution and rental housing, what we would call ‘Build-to-Rent’. Such sectors are likely to continue to act as magnets for investment in 2021.

You can register for the event here: https://www.built-environment-networking.com/event/brexit-property-sector/