The UK is rapidly approaching the end of the Brexit transition period. From 11 pm on 31st December, the UK will enter post-Brexit Britain; but, the question everyone is asking is, will we leave with a trade deal? And, what impact will the exit have on the UK property investment market?
We know that property investment, and especially property development projects, depend on the smooth runnings of the construction industry and creation of new developments. As an individual investor, the more streamlined the industry, the more homes available for investment. And, for the larger, institutional investors, if these new schemes are delivered and completed in-time and on-budget, these factors will have a significant impact on their ROI (return on investment) and how quickly they will receive this money.
These larger investors are supporting the UK’s property market through larger property developments by focusing on the rental sector; for example, through Build-to-Rent schemes, purpose-built student accommodation, and senior living projects. Whereas, for individual and first-time investors, their remit tends to be on for the Buy-to-Let rental market and, in some instances, renovations or conversions (Property Investor Today).
However, even before the Brexit transition period has ended, this sector is already facing numerous challenges.
The coronavirus pandemic must take some responsibility for these obstacles. Due to travel restrictions and national lockdowns, property developers and construction companies are finding it difficult to source their raw materials. In a COVID-19 free world, this delay in receiving the goods was already threatening to be a major consequence of Britain’s decision to leave the EU.
It is not all bad news, though. It has been suggested that Brexit could open up opportunities surrounding the planning of new property developments.
Looking back to the new planning laws that were announced in July, the industry waited with bated breath to find out that the amendments were focused on speeding up the supply process. Robert Jenrick, the Housing Secretary, revealed that the updated legislation aimed to increase the number of new homes on the market, looking to breathe new life into town centres to meet private, domestic and commercial property needs.
The laws wanted to streamline the process and fast-track the planning application, allowing the expansion of domestic homes and business premises without reallocating somewhere larger. The thinking behind these changes is to help protect the greenbelt and discourage property developers from building here. Instead, the updated laws will strengthen economic communities within towns and villages, keeping jobs in the area and expanding the community for local businesses and services.
Robert Jenrick said, “these changes will help transform boarded up, unused buildings safely into high-quality homes at the heart of their communities. It will mean that families can add up to 2 storeys to their home, providing much needed additional space for children or elderly relatives as their household grows” (GOV.uk).
Therefore, the update means that full planning applications are no longer required to demolish unused buildings, as property developers are being encouraged to repurpose them into housing, retail or other commercial use.
The construction industry, for years, has had to negotiate its way around red tape; and, consequently, the updated planning laws were seen as a welcomed change.
It would also seem that many developers have not hesitated to benefit, as the new system brought about a large investment for Westminster; under the affordable home programme, £12 billion was injected to support the building of 180,000 new homes. And, the government have also pledged to boost the Home Building Fund with £450 million from small developers too.
With this level of commitment from the government into property developing and the supply of new homes, many are convinced that the recent actions of the government will support the construction industry and suppliers throughout the UK’s Brexit period.
For more information surrounding the future of property development moving into 2021, click here to read our article considering the fate of our high streets. Will more property developers and landlords be convinced by commercial to residential schemes?