Housing and real estate

With businesses ranging from housing associations operators to international property portfolio holders, the housing and real estate industry is very broad, and the effects of the vote to leave similarly diverse. But given the long-term nature of the sector, volatility is a serious problem.There are investment decisions being undertaken at the moment about properties which will not start construction until 2020 or beyond; uncertainty makes estimating value very difficult and can create delays about decisions. On the other hand, the falling currency can make the UK property market more attractive for international investors.The real estate industry is very sensitive to the health of the rest of the economy. The strength of the construction sector is a major factor, but the growth of the hotel, industrial, leisure, medical and retail sectors all have specific consequences when it comes to real estate, as does the general demand for office space.

Key stats

  • 2.1 million employees
  • £101.6 billion GVA (6.1% of total GVA)
Regulation: There are many cross-cutting areas of EU regulation that are of interest to this industry

Because many planning regulations are domestic, it is easy to assume housing and real estate businesses are isolated from potential changes after the UK leaves the EU, but the reality is more complex than that. While stamp duty land tax, conveyancing, and formalities such as leases and tenancies are largely domestic, there are many relevant policies which stem from the EU. These include: insolvency practice, insurance, regional development policy, energy and environment, financial services, land use, health and safety, economic managements and product standards – among others.

There is also significant interest from the housing and real estate sector in the future of public procurement and about the future of EU financial services regulation, since much UK real estate development is financed by equity and/or debt, and there are a large number of pan-European real estate funds that are managed in the UK. Any changes in any of these areas must be handled with care, in close consultation with business, and with smooth transition from EU to UK competence.

International: The international reputation of the UK is hugely important to this industry

It will be crucial over the coming months that the UK's openness is promoted abroad. Openness is one of the key factors attracting real estate investors to the UK – alongside relative political stability, rule of law, transparency and domestic flexibility. The reputation of the UK as a place to invest in, trade with, and work in are all intertwined.

Funding: Long-term funding for infrastructure must not be interrupted by leaving the EU

Ensuring continued investment for infrastructure projects across the UK will be key for the real estate sector, since they are a necessary prerequisite for successful housing, office, retail and industrial developments. The UK currently receives funding from the EU
for infrastructure projects. It is important that a drop-off in the support for building and development of housing is avoided, given the serious shortage of houses in the UK which affects both individuals and businesses.

Exit: The UK and EU would both benefit from temporary transitional arrangements

For housing and real estate companies reliant on a stable financial services sector, it will be important to secure temporary transitional arrangements to allow both UK and EU financial services firms the time to adapt to any changes in our trading relationship. This time will ensure that all of our financial services firms will be able to continue to provide products and services to their clients in the housing and real estate sector.

Our members say

"There are incredible challenges in the housing sector right now, so we have very little time to spare to work out what challenges Brexit might bring. We'll just deal with them best we can." - social housing provider

"The government needs to communicate a clear strategy business can get behind. Continued support for London's position as a global financial services capital is particularly important for us." - international property services firm

"We are hopeful existing agreements will be continued so we can keep servicing the properties of clients in the EU. If health and safety rules start diverging and the UK accreditation body stops being recognised as equivalent, that could limit our growth here." - property health and safety consultancy
Our partners have more information:
  • British Property Federation
  • Home Builders Federation
  • National Housing Federation

For housing and real estate at the CBI, contact: Fiona Geskes on 07469 155 269 or Fiona.Geskes@cbi.org.uk

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