As the UK approaches a general election on 4 July, CEO Melanie Leech tells Christopher Walker what the real estate industry wants from any new government
The British Property Federation (BPF) recently published its own blueprint for a new government with 16 major recommendations. But CEO Melanie Leech says more important than any of them is “getting the relationship right from the beginning which will ensure change happens”.
Leech’s background is relevant. She has held a series of senior civil servant roles from the Treasury to the Cabinet Office and says: “I think what it does is give me an insight into how policy gets developed, as well as some relationships with people.”
The BPF is calling for two major changes to the planning system. The first would be the restoration of what Leech terms “strategic planning”. She says: “We need a larger than local level of planning that allows you to take the big decisions that cross boundaries.”
The second would be the abolition of the present government’s proposed new infrastructure levy, which the BPF has previously argued would just add to the difficulties caused by Section 106 agreements (between local authorities and developers to address the effects of new developments on local infrastructure) and the existing Community Infrastructure Levy.
“We alongside everyone from the planning professional societies to the Local Government Association and its members think the infrastructure levy is flawed and should be dropped,” Leech says.
Once changes have been made, the priority should be on instilling stability. “Leave the system alone and make it work better,” Leech says. “We need decisions to be made in a timely way.”
This require greater resourcing. “We will be absolutely prepared to play our part in that because the opportunity cost is covered by the tens or even hundreds of millions of pounds wasted on delays.”
Public-private partnerships (PPPs)
BPF is a strong supporter of PPPs. “I’ve not heard any disagreement from any politician that the only way forward in the current cash-strapped conditions is through harnessing private-sector capital to help support the delivery of public good,” Leech says.
“How do we create the right policy and regulatory environment that maximises that whilst protecting the public purse? You need balance. You have to have a sensible conversation about doing that, but realising the private sector has to make a return.”
As for policy change, Leech is looking for a strong lead. “The things we are interested in are very much long-term plays,” she says. “What we’d like to see is a party with a strong majority and therefore with the confidence to take some big decisions early on.”
Housing
In solving the UK’s housing crisis, “from a policy perspective the most important thing is a relentless focus on supply”, Leech says. “We’ve got a homelessness crisis, we’ve got a lack of student accommodation and we’ve got a lack of older people’s housing. The only answer to all of these problems is to build more homes.”
The BPF believes that the UK buy-to-rent market could double the number of homes it currently builds.
This focus on supply makes her confident a new Labour government would not introduce rent controls. “The evidence is clear that if you introduce rent controls it kills supply. We have seen this in Scotland where the pipeline of new investment fell off a cliff. Many members say to me that there is no point in going to an investment committee in any part of the world with a proposal for investment in Scotland on the table. It’s a no-go area.”
Town centres
Leech worries that, in many cases, UK town centres have “fallen into disrepair or frankly unpleasantness”. She adds: “This is not the fault of landlords or of local authorities but because the economics of town centres just don’t work in the way that they used to.” The BPF wants to create investment zones where “all interested parties can come together to make a better vision the reality”.
The BPF has called for a reform of business rates – where occupiers of commercial buildings contribute to the cost of local services – to be “affordable and sustainable”. The BPF’s election manifesto calls for “no more than around 33%”.
Leech says: “50p in the pound is just not sustainable for many businesses. It creates a death spiral for town centres by driving more and more businesses out and simply increasing the burden on everyone who is left.”
The association also calls for reform of the 1954 Landlord & Tenant Act, long-standing legislation that provides protections to tenants and landlords of commercial buildings. “Let’s face it 1954 was quite a long time ago. We want a modern piece of legislation that both reflects the way the relationship works between landlord and tenant, and also actually drives positive outcomes like decarbonisation.”
Building the green economy
Leech believes VAT should be reduced or removed entirely on all institutionally owned rental properties that carry out refurbishment. “This would incentivise them to retrofit and end the sending of mixed signals about net-zero decarbonisation. She also thinks that there should be reform of the rules governing real estate investment trusts to allow renewable energy assets to be included.
But Leech believes the big prize further out is the ability of the real estate sector to deliver green energy back into the grid. “I’m particularly thinking about our warehousing and logistics members here,” she says.
“They have the potential to generate a huge surplus back to the grid. But you have to make it work. We’re not calling for a tax break but for investment in upgrading the grid. This is fundamental to the UK’s net-zero strategy.”
