The initial impact of ‘Brexit’ on the markets was perhaps unsurprising and we know that developers do not like uncertainty and that it delays investment decisions. However, we already have a new prime minister in place and a ministry for Brexit. It is commercially advantageous for Europe and the United Kingdom to ensure trade arrangements are in place as soon as possible so let us hope that much of the uncertainty will start to evaporate soon. It is too early to make any firm predictions about what Brexit could mean for planning and the development industry but here are some initial thoughts of Richard Pigott, Director at Planning Design.
The Government has confirmed that it will continue to take forward planned legislation. Hence, the Neighbourhood Planning and Infrastructure Bill will still go forwards in mid-July and further provisions to fully implement the Housing and Planning Act 2016 will go ahead in the autumn.
If housebuilding rates start to fall, rents could continue to climb faster than incomes, reducing the ability to save for a deposit. The Treasury may then have to underpin house-building through some means in those circumstances. Perhaps we can we expect “Help to Buy” to be extended beyond 2020 in these uncertain times to keep the United Kingdom building. Current statistics indicate that approximately 40% of new homes are currently sold with this assistance.
It is no longer possible to extend the life of a planning permission by means of a section 73 application to vary the time limit specified by the condition. If the housing market starts to slow down It seems inevitable that developers and landowners will start to seek extended time limits in which to undertake their development given the uncertainty. The Government may well re-introduce formal provisions for this to happen again, as happened for a few years post credit crunch in 2008/09.
One of the key EU directives that impacts on English planning is the Environmental Impact Assessment Directive that is transposed into the Town and Country (EIA) Regulations 2011 (as amended). If the UK opted out of the single market, it would no longer be bound by the obligations that are set out in the EU EIA Directive. In the event of a total Brexit, the government may come under pressure to dilute the English EIA Regulations to cut red tape and bureaucracy within the planning system. But at what cost? There is a risk that any further relaxation of the Regulations could result in England falling behind in the protection of people and the environment. Whilst it is easy to identify the cost and time that is associated with proposals for EIA developments, it is less easy to quantify the harm that has been avoided through the thorough assessment of any significant environmental effects by decision-makers.
The impact of Brexit may be felt more keenly in the construction phase of the development process. Access to labour is a key concern for the construction industry, and it has been well-documented that many British developers rely heavily on foreign workers to fill both skilled and unskilled positions. Brexit could mean (depending on the stance that the Government takes on immigration and work visas) that foreign workers would find moving to the UK much tougher. Migrants may choose to work in other EU countries where movement will remain relatively easy, leaving British firms with a staffing crisis. The cost of construction may also increase significantly due to the increase in workforce wages that may arise from a supply/demand imbalance of workers, which could push house prices up further.
These are interesting times and the true impact of Brexit on the planning and development industry will only become clear once negotiations are underway but Teresa May’s pronouncements last week recognising the importance of new development to the United Kingdom economy are encouraging.
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