Following Theresa May’s crucial speech on the UK’s Brexit strategy, the Property Industry Alliance (PIA) has come together to identify the opportunities and key considerations that the real estate industry must take from the country’s departure from the EU.
The PIA, which includes leading representative bodies in the UK’s real estate industry, has highlighted five key areas for the Government to consider.
The group recognises that while Brexit poses risks to the real estate industry, it also opens up opportunities, if the Government takes the right steps.
Overseas investment in the UK’s commercial real estate industry is a highly significant driver of gross value added (GVA) and productivity, and must not be put at risk by Brexit, insists the PIA.
Foreign investors own 28% (£135 billion) of UK commercial real estate held as investments (more if housing and student accommodation were included). They also often partner with UK investors and other organisations to fuel UK regeneration.
An effective and efficient commercial property market produces investment in the physical and digital sectors, reviving towns and cities across the country, creating jobs, improving environmental performance, and generating at least £16 billion directly for the Government through taxation.
The real estate industry (including investment/asset management and construction) is highly reliant on the mobility of workers, and is already experiencing a skills shortage. The PIA insists that we need a post-Brexit response that focuses on training, skills, and attracting and retaining talent.
EU public procurement rules are inefficient, often misunderstood, and therefore uncertain. Brexit offers a real opportunity of streamlining the system, which will increase the velocity of investment by reducing unnecessary costs and delays, claims the group.
A simplified and fairer tax system for the real estate industry and infrastructure sector post-Brexit would increase domestic activity, retaining and improving our competitive position for investors, believes the PIA.
The most obvious opportunity is VAT, it says, where the UK’s freedom of action has been constrained in unhelpful ways by European law and the case law of the European Court of Justice.
Brexit represents a chance to revamp the complex and somewhat inefficient environmental sustainability regulatory framework, to provide better, more efficient long-term solutions and green growth, insists the organisation.
It says we would undoubtedly want to retain some UK legislation derived from EU rules, reform other areas, and remove particularly ineffective laws.
The Chairman of the PIA, Bill Hughes, says: “Real estate is a critical and enabling part of the UK’s economy, shaping our towns and cities, and challenging productive investment into the real economy. The UK asset management industry is one of the largest in the world and a key contributor to the UK economy. Within it, real estate is a core investment asset for private and professional investors, both domestic and global, particularly for its income-generating characteristics. The ability of the industry to continue to undertake cross-border activity from the UK and retain mobility of talent is crucially important.
“The PIA plays an integral part in explaining the role that UK commercial property plays in the UK economy, its importance in improving the built environment and its wider social contribution to local communities. As such, it is critical that we do not sit and wait to see what a post-Brexit world might look like. We have the chance to shape our real estate industry for the benefit of the UK.”
The members of the PIA are: The Association of Real Estate Funds (AREF), British Council for Offices (BCO), Revo (formerly BCSC), British Property Federation (BPF), Commercial Real Estate Finance Council Europe (CREFC Europe), Investment Property Forum (IPF), Royal Institution of Chartered Surveyors (RICS), and the Urban Land Institute (ULI).
Do you believe that the real estate industry can indeed benefit from Brexit?