Arise Sir Keir Starmer, you and your colleagues now have five years or more to deliver on Labour’s pre-election promises to voters. In the immediate aftermath of his party’s landslide victory, much is being made of the need to deliver new and much needed housing across the UK.
The likelihood of that occurring will be greeted with a great deal of scepticism, as a succession of his predecessors also made similarly bold promises and then failed to deliver. Speaking to many in the industry of late, the barriers to building 300,000 new housing units annually are significant, with a huge shortage of skilled workers in the build industry and the difficulties in getting planning approval being the ones regularly quoted.
Mortgage affordability is also the key to reviving activity and sales volumes in the residential property sector, but until we see BOE interest rates on a downward path towards 4% from the current 5.25%, many potential buyers are still sitting on the sidelines despite the easing of rates by many lenders in recent weeks.
Labour have announced that building in and around green belt land is not sacrosanct and intend to encourage ‘grey belt’ development, as well as encouraging more brownfield sites to be built on. Local authorities will have clear housing targets, so at least in theory a way forward is being shown to achieve the ambitious targets.
Our investor interview this month focuses on a developer and a ‘grey belt’ scheme now recently built, on page 20 you can read all about the challenges Paul Higgs faced in bringing this project to fruition. As I have regularly commented over the years succeeding with property development is not to be taken for granted and of late I have been hearing more tales of woe about developers who have failed and investors in their projects whose monies have been squandered on ill-fated projects.
Our lead article this month on page 14 looks at the ongoing and hugely important issues in the post-Covid world as hybrid office and working from anywhere work patterns have increasingly become the norm. The data is telling a clear story and it needs to be acknowledged, if as a portfolio landlord or developer, you want to maximise your total returns over the next 5-15 years. Placing your ‘bets’ in the wrong locations which have poor prospects for capital value growth ahead could prove very costly.
There is without question a clear opportunity in the commercial property sector to acquire and convert outdated and unwanted offices and shops in many locations to alternative use as either part or full residential. How to fund these potential purchases is the focus of Suzi Carter’s article this month on page 32.
