A cursory glance at April’s trade press suggests that most things in Real Estate’s spring garden are rosy: exciting new developments across the country are about to come out of the ground, agents report a strong start to the year with plenty of properties in the pipeline, UK hotel investment is at its highest since the pandemic and inflation is continuing to fall.
But look closer and you can see the potential for tricky conditions underfoot and hidden hazards for the unwary. According to Property Week, London’s West End investment market slumped by 20% in Q1 and the UK construction sector’s output fell by almost 2% in February. The Property Chronicle ran nicely balanced pieces on the Bank of England’s recent warnings for the Private Equity market and on the threats, as well as the opportunities, posed by AI.
We read of the Labour Party’s dramatic new policy (should they win the next election) of releasing “grey” Green Belt development land to boost house building but exactly how these difficult judgment calls on land quality will be made is not yet clear. The devil resides in such detail and who knows what the unexpected consequences of such a policy might be; negative transport, ecosystem and land drainage impacts on existing communities, the blighting loss of visual amenity or the gradual encroachment on, or decline of, future isolated “high quality” pockets of Green Belt land? The idea may be well-intentioned but be careful, Keir, be very careful.
One group in our sector must certainly wish it had been more careful. Propertymark reported that over 250 property agents have now been fined for failing to comply with the Government’s Anti-Money Laundering (AML) obligations. HMRC announced that over £1.6 million of penalties have been issued for breaches, including incomplete due diligence, missing documentation and failures to recognise high risk jurisdictions, companies and Politically Exposed Persons. It is also a criminal offence for estate agents, property auctioneers and high-value art dealers not to be registered with HMRC for AML oversight. In time, the names of all the businesses breaching the regulations will appear on the UK Government’s website, where the estate agents, financial advisers and others who have been fined, up to the tax year March 2022, are currently publicly viewable.
An item in the Evening Standard also caught my eye as it discussed how the presence of artists in a neighbourhood can enhance its desirability and worth. The author of the article, Peter Carty, cited Hoxton and Shoreditch that have transformed from low-rent districts into gentrified areas, partly by the arrival of a wave of young British artists.
I recall some American Real Estate agents talking to our students about this phenomenon more than 20 years ago. They’d noticed the same pattern in their cities where places which were home to successful creatives became fashionable: the artists, film makers, writers and musicians who moved there carried with them a free-thinking, stylish, cool cachet which positively impacted on rental and capital property values. As Gislason, Florida, West and Woolrich stated in the USA’s Medium Magazine: “businesses and commerce will be attracted to talented and creative people […] Don’t waste money on stadiums […] or luring big companies with tax incentives. Instead, make places where they want to be, with a vibrant arts and music scene and a lively cafe culture…”
Finally, in a well-written, helpful article in Property News on improving the EPC ratings of residential buildings, authors Ryan Bembridge and Christopher McFadden set out four relatively easy steps we can take to reduce our home energy costs. This is important information of course but shouldn’t we all know this stuff by now? The fact that we don’t means it is surely time to make practical environmental knowledge a core subject in our schools. There’s another new initiative for the next Government! In time, we’ll see some truly sustainable green shoots appear.
