Q1 Healthcheck / Q2 Predictions: Brexit, Mayor, PRS, Housing and Planning Bill, airport expansion

Author: Matthew White, Partner and Head of Planning, Real Estate, London

In the week before Christmas, the daffodils were blooming, the birds were chirping and it was warm enough to cycle to work in shorts. In the week before Easter … well, nothing much has changed. And that pretty much sums up the ‎development market in Q1. Transactions held over from December were duly completed, but the dealflow since then has been been falteringly slow.

MIPIM, always a good barometer of market sentiment, was summed up by the weather too – it was not nearly as ‎balmy as expected and left you feeling let down and a bit foolish that you'd brought your sunglasses.

Much of this is being driven by Brexit. Whilst I don't think the vote will make a big difference to development in the UK ‎either way, it is the uncertainty of whether we will end up in or out that is causing stasis. Like Schrodinger's cat being alive and dead at the same time until the box is opened and the quantum waveforms collapse, investment decisions ‎are quite reasonably being held back until the outcome of the referendum is known.

In London, we also have a Mayoral election to contend with. Ken Livingstone and Boris Johnson may have been at opposite ends of the political spectrum, but both were firmly pro-development. Looking at Sadiq Khan and Zac Goldsmith on the hustings, I am not convinced that the next four years ‎will be quite so developer-friendly.

Development has always been a Q2/Q4 business of course, so a slow winter is not that unusual. This feels like a pause for reflection rather than a sign of deeper retrenchment. To lift a metaphor off the back of England's Grand Slam victory, we're just waiting for the referee to call "set" before the front row engages again.

So, here are my predictions for Q2:

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What to look forward to in 2016: Planning changes on the horizon

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Herbert Smith Freehills' real estate development team are monitoring a number of areas of law likely to change during 2016.  Here is a summary of some key areas of change we expect in the field of planning (from a development perspective), highlighting some opportunities these changes may present. 

For more information please contact Matthew White or Lucy Morton at Herbert Smith Freehills.

1. Office-to-residential conversion rights to be made permanent

2. Housing and Planning Bill due to become law

3. CIL Review Panel to report on whether CIL is meeting its objectives

4. Government's response expected on the National Planning Policy Framework consultation (including changes to green belt and affordable housing policies)

5. Affordable housing renegotiation provisions to expire on 30 April 2016, unless extended

6. Government due to respond to the Airports Commission Final Report (which recommended Heathrow expansion)

7. International property measurement standards changing

8. Carbon offsetting requirements expected to be amended or abolished

9.  National Infrastructure Commission to report at Budget 2016

 

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Housing and Planning Bill announced

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Yesterday (13 October 2015) the Housing and Planning Bill was published, proposing new planning legislation including requirements for starter homes in section 106 agreements, planning permission in principle on brownfield sites, and allowing housing elements to be included in NSIPs. The broad aims of the bill are to further streamline the planning system as well as to create more housing. A few highlights are outlined below.

1. Starter Homes required in section 106 agreements

2. Planning Permission in Principle

3. NSIPs with housing elements

4. Right to buy

 

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