Businesses are increasingly concerned about the impact the current political and economic uncertainty will have on development and property investment in the UK, according to a new survey.
With daily headlines and speculation about the country’s preferred vision for Brexit, the outcome of the negotiations and the ultimate shape of the UK’s future relationship with the European Union is now the greatest concern to the industry, says the poll from Crowe UK.
With Brexit potentially impacting upon the British property market, and its subsequent attractiveness to foreign investors, some 44% of respondents said they would prefer a soft Brexit, with 37% preferring no Brexit at all.
Despite these uncertainties, businesses in the property and construction industry remain confident in their growth plans and trajectory. In the next 12 months 62% of participants were positive about their business growth.
Meanwhile, the survey also found that 60% of participants currently have little or no difficulty obtaining funding, with 36% suggesting access to funding has improved compared to 24% last year.
For the fifth consecutive year, respondents highlighted the current UK tax system as unfavourable for developers and investors, with more than 82% identifying stamp duty as the biggest tax barrier to business growth.
In addition, some 77% of respondents highlighted that the current green belt protections were not conducive to solving the housing crisis.
The research also suggests that emerging technologies are reshaping the property and construction market, posing an opportunity and a threat to those within the industry.
Respondents identified retail and office space as the two property types most likely to be impacted by advancing technological trends and cited modern methods of construction as the next big thing to impact the sector, followed by artificial intelligence and then big data.
This year’s survey also found that growth in the London market is still stifled by uncertainty and stamp duty. Due to the introduction of Crossrail, the wider South East area of London was identified by this year’s respondents as having the greatest potential for investment, with buyers seeking cheaper alternatives within a commutable distance from the capital.
Birmingham and the West Midlands were also regarded as a prime area of investment over the next 12 months, with the region set to benefit from the HS2 high speed rail project reducing journey time between Birmingham and London to 49 minutes.
‘Even with the addition of the Government’s newly released guidance on preparing for a no deal scenario, there are still many issues that cannot yet be addressed and remain as Brexit’s fiscal unknowns,’ said Stacy Eden, head of property and construction at Crowe UK.
‘This is what is causing the biggest headache for the property industry, and are likely to hit competition and reduce the UK’s attractiveness in the eyes of foreign investors. If Britain loses its free access to the single market there is a worry that this could rapidly change the UK’s status as a commercial gateway to the rest of Europe, with consequences for both occupier and property investment markets,’ he pointed out.
‘Low growth has been experienced in parts of the property sector with our findings suggesting that the greatest impact will be felt in the retail regional market, followed by the London residential market. Brexit and economic uncertainty, stamp duty, the rise of e-commerce, business rates and national living wage could be attributed to this low growth,’ he explained.
Eden also said that when it comes to housing, the issues identified by the market remain the same as ever and as stamp duty and green belt concerns are not new, it is worrisome that successive Housing Ministers have failed to take meaningful action.
‘The Chancellor’s 2018 Budget acknowledged that the housing market needs to be fixed. The announcement of extended support for first time buyers to help them get on the housing ladder and encourage development is positive, but there can be significant negative consequences in terms of just boosting prices for certain types of new builds leading to negative equity in the future,’ he concluded.
