British Property Federation boss on Brexit uncertainty, the housing shortage and the rise of build-to-rent
Property makes £94 billion a year for Britain, says Melanie Leech, head of powerful lobby group the British Property Federation – but Brexit is looming and could have a huge impact on the industry.
From a young police constable pounding the beat in Paddington Green in 1985 to her current job as chief executive of the powerful lobby group, the British Property Federation, Melanie Leech’s career is impressive. She read maths at Oxford, but “didn’t want to be an accountant”. After the Metropolitan Police, she worked in what is now HMRC, then ran the office of the Cabinet Secretary and Head of the Civil Service — a job at the heart of government, which gave her many contacts.
In 2005, she went into the Food and Drink Federation. Now she represents the property industry at a crucial time. What links all her jobs is a commitment to public service.
“People don’t realise how important property is, how it underpins everything. It’s critical, and its interests should be listened to,” Leech says.
Few people know that the British Property Federation represents the interests of companies who range from vast FTSE 100 developers such as British Land to planners to architects. “Building is crucial to the UK economy.” she says.
‘WHOLE INDUSTRY ANXIOUS’ OVER BREXIT UNCERTAINTY
Whether houses, offices, shops or plazas, we spend our work and leisure time in and around them. The market value of UK real estateis £1.6 trillion; 21 per cent of our net wealth. Real estate contributes £94 billion annually to the UK economy and directly employs 2.1 million people — almost seven per cent of the labour force.
Those direct employees include construction workers, and as Brexit looms, this is an area where Leech and the BPF are vocal. “In the London construction industry, we’re reliant on about 30 per cent EU workers,” she says.
The BPF has published a Brexit Manifesto, one of whose five planks is a call to Government to ensure a continuing supply of labour from abroad post-Brexit.
She acknowledges that there is anxiety “in the whole property industry” about the uncertainty around Brexit, which, she says, could result in the loss of billions of pounds in terms of derailed projects. No projects, no customers, no jobs, no money.
FIXING THE BROKEN HOUSING MARKET
As successive governments fail to meet housing targets, Leech sees the Prime Minister’s recent announcement of £2 billion investment in social housing as marking an important “shift of thinking”. “It’s a recognition that the Government and councils have to build; a recognition of the return of the council house and social housing.”
She talks refreshingly straight: “The term ‘affordable’ is a misnomer,” she says. “It’s a slight discount, which isn’t the same as making housing available to everyone. So it is significant if the Government accepts that commercial builders cannot build all the housing we need. Two billion pounds isn’t going to meet the need, but if the Government gets good council proposals, working together with housing associations, it will create momentum.
“You can’t build 50,000 more homes than there were yesterday overnight, reversing 25 years of undersupply. It’s a good start, but it won’t solve the problem on its own.”
BUILD TO RENT IS A KEY LONG-TERM INVESTMENT
The BPF backs “build to rent”, which invests money, often from pension funds, in blocks of flats (usually) for rent. It also backs the Government’s commitment to offering three-year tenancies, so crucial for stability, and 20 of its members so far have signed a promise to offer them.
Leech says with a rare, wry grin: “We promoted the build-to-rentidea to the Government like a five-year Chinese water torture, until they understood it and put it in place.” She explains that unlike normal building to sell, where units are sold off along the way to create finance for the ongoing build, build-to-rent needs all the money upfront, so it’s a different way of working, a long-term investment.
Nevertheless, it is a safe home for investors’ money, with a constant good return. And now it can be taken up, developments of 500 units at a time are being built, creating good-quality homes. Leech, who has two boys of 13 and 17, says she’s glad that when the eldest comes out of uni, they might be there for him to live in.
INNOVATION IS FINALLY COMING TO HOUSEBUILDING
“Innovation is overdue in the housing sector,” Leech says; she’s excited by so-called Modern Methods of Construction (MMC).
Done for decades in Europe, British factories are now building pre-fabricated, very high-spec sections of houses off-site, which go up quickly. A far cry from post-war prefabs, it’s a great way to build very energy-efficient homes very fast, and the BPF backs it. One of Leech’s members, Legal & General, now has an MMC factory in the Midlands.
“Overall, we’ve got a long way to go to reverse a long trend of undersupply, and we need to turn all the statements from Government into reality. But maybe elements of the jigsaw are coming together.”