What to Expect for Commercial Property Under Keir Starmer’s Labour Government

Oliver Maxwell-Jones, Head of Commercial Property and Partner at Coole Bevis LLP, provides insights for stakeholders in commercial property to consider under the new Labour Government.

Nearly a month on from the election of a new Labour government and already it’s obvious there will be a significant shift in the political landscape of England.  What this means for the commercial real estate sector, only time will tell.  As a commercial property lawyer, I have been closely monitoring the Labour Party’s policy proposals and their potential impact on the market. Here, I will explore what I think we can anticipate in terms of regulatory & economic influences, as well as market trends under this ‘change’ administration.

Regulatory Changes and Policy Shifts

One of the most well-known aspects of the Labour government’s proposals is its commitment to addressing the housing crisis and promoting sustainable development. To deliver on 1.5 million new homes in five years, change requires streamlining an often seen as sluggish, cumbersome, and confrontational system.  Promising reform is easy, delivering on what blocks site delivery will not be so in a planning system lacking in resources.

The Labour Party has also indicated a desire to fast track both brownfield and “low quality” “grey belt” sites.  Again, easily said.  Site investigations, remediation costs, and clean up all make development of former industrial sites both time consuming and more costly.  “Grey belt” sounds a good idea, defining it and delivering it whilst avoiding the NIMBY’s is another.  That being said, the reintroduction of housebuilding targets (up 70,000 to 370,000 a year) is likely to force English councils to use sites in these areas.

Economic Influences

Where affordable, increasing public spending nationally on infrastructure and services would be designed to stimulate economic growth and create new opportunities, including for commercial property & development.  It’s expected that the green technology sector will receive government support, so we may see increased activity and demand for space for commercial activities, solar & wind farms. The new government, however, faces the same challenges – cost of living, government finances, as well as a complex global environment – as the previous one.  These will be a slower ship to turn around.

Together inflation heading in the right downward trajectory and a drop in interest rates can be an easy win.  However, Labour’s (so far unannounced) plans to raise corporate and capital gains taxes will pose challenges for businesses and, potentially, affect demand for commercial property. The weak economy, post Brexit challenges, a surge in borrowing costs, and an extended period of relative political instability, have all been reasons for both businesses and investors to postpone spending decisions.  Real-estate decision makers plan for the medium to long-term.  So whilst ‘change’ is what the many voted for, it may be a lack of surprises that the commercial property sector needs.

Market Trends

In the short term, we may see a period of uncertainty as the market adjusts to the new political environment. Investors and developers will be closely watching the government’s actions and seeking clarity on key policy areas. The latest Bank of England decision on interest rates is due on 1^st August, another two by the time the new Chancellor is expected to make the new government’s first Budget at the end of October. Perhaps by then we will have a clearer understanding about Labour’s taxation and spending plans, including filling in the apparent £20bn blackhole left by the previous administration.

Before the election, both Labour and the Conservatives had not too dissimilar tax plans, so Rachel Reeves’s first budget is not likely to have too many surprises for the real-estate sector.  However, a shift in focus to sustainability and community development could lead to new trends in the market. Continuing the post-COVID trend, there may be a growing demand for flexible and adaptable spaces that can be easily repurposed to meet changing needs. Replacing the business rates system could level the playing field for the high streets versus the online giants.  Additionally, the emphasis on sustainable development could drive innovation in building design and construction, with an increased focus on energy efficiency, green spaces, and smart technologies. By addressing social and environmental concerns, the government aims to create a more sustainable and equitable economic environment. For investors and developers willing to adapt to these changes, there could be significant opportunities to contribute to and benefit from the transformation of the commercial property landscape.

Embracing Change…

If you voted Labour, change is what you are going to get. How much room for manoeuvre the new Labour government has is debateable. I’d like to think that Labour has the will power to implement its promises in a way that delivers on opportunities for growth and innovation. Looking deeper into the crystal ball, perhaps just stable government could contribute to a more balanced and resilient commercial property market.  So, by staying informed and flexible, stakeholders in the commercial property market can position themselves to thrive in this evolving landscape.

Coole Bevis’s specialist commercial property lawyers will support you and your business with legal advice to help you maximise on opportunities and meet your business objectives. For more information regarding commercial property law and how we can assist your business through this new political landscape, please don’t hesitate to contact our team today.