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Reforms for property under May unlikely, but industry needs to speak up loudly to new ministers

by Andrew Teacher

How times have changed. Theresa May, whose reign in the Home Office was long typified by stand-offs with the police and a hard line on immigration, has been seen as the “reformer” candidate. Don’t get me wrong; she’s the best Tory for the job. But the sense across most prominent political campaigners was that she was the “least bad” option rather than the ultimate leader. 

The universal lampooning of Andrea Loathsome at least showed the media wasn’t wholly out of touch with reality. The potential for grassroots Tories to “do a Labour” and vote in a complete numpty was quite high. And it isn’t without some irony that, having voted for Brexit, our new, semi-democratically elected leader, is a Remainer.

But anyone expecting major reforms under Mrs. May is likely to be disappointed, at least in the short term. Her focus will need to be on calming nerves and soothing volatility. Whether this means staying in the single market or not remains to be seen. At home, it will mean avoiding any nasty shocks and doing what’s needed to calm nerves. 

Today’s survey from the British Chambers of Commerce (BCC) claims that confidence was declining before the Brexit vote. Quite how the BCC’s members benefit from talking down the economy isn’t clear. But hey, it gets them on the radio, right?

While pandering to the media has never appeared to be her thing, the new prime minister is still likely to pander to your average Daily Mail reader concerned about house prices, fuel prices and local schools. This is fair enough. What this may mean for the property industry is a chance to reclaim a bit of balance where tax and planning rules are concerned.

 When it was announced, last year’s stamp duty hike for commercial and residential property went down like house-builders’ shares the day after Brexit. The continued strength of both the commercial and residential listed sectors will have done little to deter the Treasury chipping further away at property. After all, how many votes are you likely to lose taking a few chunks out of real estate investment trusts (Reits) or the likes of Barratt and Berkeley Homes?

Similarly, the 3pc surcharge on buy-to-let homes will have done little in the long-term to take the edge off of prices. It may have hit sales initially in April, but over the life of a mortgage, it makes little dent on returns, particularly for cash-rich buyers with nowhere else to shovel their money. 

Meanwhile, the recent property funds crisis will have done little to enamour the sector into the political or public consciousness. Of course, anyone investing in funds and treating them like equities is an idiot. But let’s be honest, fund managers don’t help themselves. And it’s not like anyone could say this wasn’t foreseen. I hear that industry stalwart and former PwC partner, John Forbes, has had to splash out on extra server capacity because of the rash of downloads of his 2012 report “Unlisted funds – lessons from the last crisis”.

Together with the single-handed hatchet job undertaken by Jefferies analyst Mike Prew – possibly the most quoted commentator in property and known for his perpetually negative stance on Reits – the industry will not be seen by incoming Cabinet members as particularly deserving of any tax breaks. 

In our work leading the fledgling Better Renting campaign, a group of emerging build to rent investors and developers, Blackstock vehemently helped make the case for a stamp duty break on rental schemes with a push to hand over more public land for build to rent schemes. The open letter sent to housing minister Brandon Lewis received wide coverage in the Times and Property Week.

Yet, while most people understand the social value of housing, the commercial sector remains a mystery to many. Were you to ask most office workers who owned their building, few would know. Does this matter? No, probably not. But the lack of appreciation of the economic value – and indeed the risk taken – by Reits, unlisted investors and the wider sector, is a barrier to better policy-making. 

Just as Mrs. May pushed back against the tide of corruption and incompetence widely seen in the police, banks could well be next according to reports like this from Bloomberg. The commercial sector needs to stand up now and be counted. 

This means better explaining what it does. It means setting the record straight and it means dealing with some of the long-standing nonsense that occurs across both residential and commercial agency (or else face the wrath of regulation). While companies are quick to blame the media for being overly negative (which I don’t think it has been), they are often pretty poor at speaking clearly and communicating their message effectively. 

If ever there was a time to stand up, speak up and be counted, it is now.

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