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A break for the better?

Words: Simon Wicks
EU referendum broken egg

We've taken a look at the potential impact on planning of a No vote in the European Union referendum on 23 June. Here, we consider how the property industry more widely feels about Brexit, and Tony Pierce puts the case for leaving the EU

Brexit – a view from the property industry

In December 2015, a poll by property consultancy Carter Jonas of 69 leading property figures found a clear majority felt a Brexit would have a negative impact on investment in UK property. More than two-thirds felt that leaving the EU would have a negative impact on the UK occupational property market.

Indeed, the respondents felt that Brexit was on a par with the housing shortage as a challenge facing the UK property market. When polled again in February 2016, attitudes seemed to have hardened slightly (see figures).

Commenting on the results, Darren Yates, head of research at Carter Jonas, says: “Business doesn’t speak with one voice and neither does the property industry. But the extent of the majority was surprising. I thought it would have been closer.”

Speculating on the reasons for the poll result, Yates stresses that EU withdrawal would cast the UK economy into relatively unknown territory – but certainty is what investors crave.

"We’re bound to get volatility in the run-up to things like a referendum, and potentially afterwards if there’s a Brexit"

“We’re bound to get volatility in the run-up to things like a referendum, and potentially afterwards if there’s a Brexit,” he notes. “It’s going to take a year or two at least to sort things out, and businesses and investors are going to be thinking, ‘What’s it going to cost us to buy and sell property? What are the currency implications? Have we got the right staff in place, with permission to live and work where they’re based?’”

Nevertheless, Yates feels the size of the UK economy and the strength of its property market will ensure a settled position in time should it come to a No vote. “We are a large, wealthy and growing market. If you look at the indices produced by the World Bank, this is one of the best places in the world to do business.

“It’s well regarded, relatively open, you can move money in and out easily, and it’s the second or third-placed property investment market in the world.”

There is also the fact that while close to 50 per cent of investment in commercial UK property last year was international, Europe was responsible for a relatively small proportion of that. The biggest overseas investor remains North America, and investment from growing markets in the Far East is increasing.

The message from Yates? The coming referendum fuels uncertainty, a Brexit will take us into unknown territory, but the scale of the UK market will enable us to negotiate mutually beneficial deals with Europe. Whatever the result, he stresses, the UK is and will remain a good place to do business in property.

Planning’s case for Brexit

We invited readers to give us the planning case for leaving the EU in the forthcoming referendum. Tony Pierce, director of Urbisnet Consulting, took up the challenge.

Tony PierceThose arguing to stay in the EU often mischievously conflate it with Europe, and Brexit is often posed as ‘leaving Europe’, writes Tony (left). But while many people identify with Europe, very few positively support the institutions of the European Union. The wonderful diversity of European peoples, their languages, the history, vibrancy and character of many great cities all contrast strongly with the bland bureaucracies of the EU.

Most in the development industries want to see higher standards of planning, design, safety and construction, but is the EU the institution to deliver them? Shouldn’t raising standards and improvement be driven by people with the knowledge and experience, rather than by a remote technocracy? Of the 24 appointed European Commissioners, only Karmenu Vella, from Malta, has any training in a development or construction profession (architecture) and he went straight into politics from graduation.

"While many people identify with Europe, very few positively support the institutions of the European Union"

Governments have ceded accountability for construction clients, professionals and technicians to the EU. We all wonder at the complexity of procurement and protection rules of the EU, for example, that have taken control away from clients in the commissioning of planning, design and building services. The technocrats of the EC treat construction professionals as misguided children. Like all regulators, they use the worst excesses of a very few to limit the behaviour of many, so stifling experimentation and intellectual imagination.

The UK stopped significant state investment in blue-skies research into construction technology soon after joining the EEC in 1975. Subsequent EU state subsidy rules and direction put a brake on innovation in building technologies in the UK. No wonder, after 40 years of not investing in building R&D, the UK now finds it difficult to break out of cottage industry and 20th century construction methods, and cannot build homes at the rate needed.

The failure to invest enough in planning and building methods, and the controlling, regulatory EU context result in more lawyers and environmental consultants being employed in local plan production than trained planners and designers. All significant planning decisions are mediated through legal rather than democratic processes. For politicians to express frustration at the slowness of house building is understandable, but to blame ‘the planners’ is disingenuous and destructive.

"The technocrats of the EC treat construction professionals as misguided children"

People point to the work of the EC in promoting environmental regulation as a positive reason to remain in the EU. Underpinning EU environmental directives is the tenet that all human development has a negative impact on the planet that must be mitigated. This denies all the positive benefits of development as an essential part of human activity that should be promoted in and of itself. Penalties on development in the form of planning obligations to mitigate impact are promoted, particularly by the EC, as a way of extracting a tax on any uplift in land values arising from development or industry.

Whatever your view on the benefits of these environmentally specific taxes, the requirement for them was imposed by EC directives, without any democratic or public debate. For example, proposals to inundate coastal areas and give up land to the sea, on environmental grounds, have very little regard for local people, nor much respect for the physical integrity of the UK.

The EU record on the economy is also one of providing national political elites with an excuse to avoid all accountability for poor economic performance. It is no coincidence that the EEC and then EU grew from the early ’70s onwards, a period of 45 years in Europe of continuing, sluggish economic growth, slow-downs in productivity and increasing reliance on individual and national debts to sustain living standards.

"The EU would rather we all accepted an economy based on limits on production and consumption, a sort of make-do-and-mend type of recycling"

The EU is now promoting circular business models for the economy, as an alternative to economic growth. Having failed to invest and create the productivity and jobs we all need, the EU would rather we all accepted an economy based on limits on production and consumption, a sort of make-do-and-mend type of recycling. Lowering horizons, rejecting the intellectual and innovative powers of ordinary people, promoting a fashionable rehash of craft industries and imposing regulations on production and consumption are all current EU strategies that distract from the need to invest in infrastructure and raise productivity. Such circular business economic models should be consigned to history along with the EU.

The EU is too entrenched in its anti-democratic ways to reform. A vote to leave the EU is the only way to rebuild a more dynamic building and property sector.

You can follow Tony on Twitter (and debate the EU referendum with him) at @tony_pierce

Image credit | Shutterstock

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