Boris Johnson: what are his key pledges for the real estate industry?Astrid Svensson
And so, after two months of debates and speculation, Boris Johnson decisively won the Conservative leadership contest this week, making him the UK’s Prime Minister. Without a doubt, the first and most complex item on Boris’ agenda will be dealing with Brexit. As he delivered his first speech as PM on the steps of Downing Street, he vowed that the country will leave EU on 31 October “no ifs, no buts” – declaring that “the buck stops here”. Of course, the EU’s chief negotiator swiftly dismissed his plans, deeming the proposal presented to MPs “unacceptable”, while Irish Taoiseach Leo Varadkar said Boris’ comments were “not in the real world” and that a new Brexit deal was “not going to happen”.
The run-up to Brexit is already having a tremendous impact on the real estate market with figures from Lambert Smith Hampton showing that UK property investment in H1 2019 was down 30 per cent compared to last year amid increased Brexit uncertainty. The big question of course is: what will Boris as PM mean for the industry?
According to Steven Norris, Soho Estates Chairman and former UK Transport Minister, he will bring “certainty to an industry that sorely lacks it”, which in turn will release built-up energy for the commercial property sector. Furthermore, Norris believes that a Boris-led government will benefit the commercial real estate industry by implementing “business-friendly policies” to increase the UK’s attractiveness in the global market, by investing and infrastructure and reducing tax rates, for example. The latter would especially benefit the under-pressure retail industry – The British Retail Consortium reacted to Boris’ appointment as PM by urging him to “rethink the high street strategy” and claiming that business rates “pose an unsustainable burden on shops and jobs”.
Not everyone is positive about the prospects of Boris in No. 10, however, with some foreseeing potential ‘chaos’ in the event of a no-deal Brexit. One analyst said that a crash out of EU would negatively impact London’s office market, which has already seen a slow-down of foreign investment, while the industrial and logistics sectors would be hurt by potential trade barriers. The British Property Federation stressed the need for the UK to “remain open, with the right conditions for investment and trade”.
As for the residential market, Boris has promised stamp duty reforms in a bid to reinvigorate the housing market and help first-time buyers get onto the housing ladder, but according to Lucian Cook, head of residential research at Savills, the improvements would likely only result in a moderate and short-lived boost in activity and price growth.
The true implications of Boris’ appointment– for the property sector and beyond – are, for now, unclear. One thing is certain: BoJo means Brexit, and his Cabinet of Brexiteers have a busy time ahead if they are to deliver on their proposed deadline.