The property industry in the UK is being urged to look at and act upon the opportunities that could open up as a result of Brexit rather than focusing on the negatives.
According to the Property Industry Alliance (PIA), which brings together leading representative bodies from the UK’s commercial property industry, the government also needs to take into account the real estate industry when formatting its Brexit deals.
The PIA has identified five key areas that it believes the government should take on board and points out that while Brexit poses risks to the real estate industry, it also opens up opportunities if the Government takes the right steps.
It points out that overseas investment in UK commercial real estate is a highly significant driver of GVA and productivity and must not be put at risk by Brexit. Foreign investors own 28% or £135 billion of UK commercial real estate held as investments and more if housing and student accommodation are included.
They also often partner with UK investors and other organisations to drive UK regeneration. The PIA says that an effective and efficient commercial property market produces investment in the physical and digital, the fabric of towns and cities across the UK, creating jobs, improving environmental performance and generating at least £16bn directly to government through taxation.
It also explains that 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 is calling for a post-Brexit response that focuses upon training, skills and the ability to attract and retain talent.
In term of positives it also points out that European Union public procurement rules are inefficient, often misunderstood and therefore uncertain and Brexit offers a real chance of streamlining the system, which will increase the velocity of investment by reducing unnecessary costs and delays.
The PIA reckons Brexit is an opportunity to improve tax in the real estate industry as a simplified and fairer tax regime for the real estate and infrastructure sector would increase domestic activity, retaining and improving a competitive position for investors. The most obvious opportunity is VAT, 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.
It also says that Brexit represents an opportunity to revamp the complex and somewhat inefficient environmental sustainability regulatory framework, to provide better more efficient long term solutions and green growth. The best outcome would be to retain some UK legislation derived from EU rules, reform other areas and remove particularly ineffective laws.
Bill Hughes, chairman of the PIA, said: "Real estate is a critical and enabling part of the UK’s economy, shaping our towns and cities and channelling 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 Property Industry Alliance 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.
