Liz Truss has been selected to replace Boris Johnson as leader of the Conservative Party and therefore Prime Minister, but what does that mean for the UK's real estate markets?
The 47-year-old accountant's real views are difficult to pin down as she has been notably changeable in her life on political and social issues. She has already made her likely position on a range of key issues for property clear, particularly housebuilding and development and business rates. In fact, she is promising a radical rethinking of planning.
A peripatetic childhood following her mathematics professor father and politically active socialist-leaning parents as they changed jobs saw her live in variously Oxford, Paisley, Leeds and Canada. That has perhaps been the key formative factor for a personality able to speedily about-turn on previously strongly held convictions.
A passionate Liberal Democrat as a student who once stood up at an Oxford University debate to call for the monarchy to be abolished, she switched to an increasingly right-of-centre Conservative in her early twenties after moving to London.
More recently, she changed from enthusiastic Remainer during the EU referendum, to increasingly committed Brexiteer in the aftermath of the vote. She is one of the few Remainer Conservatives to have thrived at a senior level after the decision to leave, evidence of either her flexibility and pragmatism, or her ruthless streak when it comes to furthering her political ambitions. She has nevertheless been consistent in a range of areas.
Perhaps most importantly for real estate, Truss is a fierce proponent of free trade and entrepreneurship. In 2012 she co-authored Britain Unchained, a manifesto that argues for a more meritocratic Britain and less "idling" by workers. In 2017 she was a key figure in the launch of the free market trade group Freer and has consistently lambasted nanny-state regulations and argued against raising taxes while alongside Johnson she formulated a policy to cut taxes for people earning over £50,000 a year.
Truss claims to be an "environmentalist" and was Environment Secretary between 2014 and 2016. As an MP for her constituency Thetford Forest she has lobbied hard for major infrastructure projects including the A11 west of Thetford becoming a dual carriageway and improvements to road junctions, but has also fought proposals to sell off forests for development, and fought to prevent a waste incinerator being built in King's Lynn.
She signed the CEN pledge, committing to achieving the UK's net zero target by 2050 but in 2022 said that she wanted to do this "in a way that doesn't harm businesses or consumers" by shelving green levies on domestic and business bills.
She reportedly plans to scrap an environmental rule called the "nutrient neutrality" requirement which means developers have to detail the pollution impact of their proposals on rivers and wetlands.
At hustings she has said she will approve oil and gas drilling licenses in the North Sea, part of plans to insure British energy security. She has also vowed to end the UK government's moratorium on fracking and has said that she would support the construction of small modular reactors and large nuclear power facilities.
Business Rates
Truss has pledged change for one of real estate's biggest gripes, the business rates system.
Truss is reportedly planning a cut to rates to shield businesses from soaring energy prices. It would see the threshold for relief raised from a rateable value of £15,000 to £25,000. Truss’s campaign team expects this to provide cuts for an additional 200,000 businesses.
Jerry Schurder, business rates policy lead at Gerald Eve, says this proposal would benefit far fewer properties than has been suggested and fall well short of the assistance businesses require in the face of huge hikes in energy bills.
Gerald Eve’s research says the Truss proposal would not be particularly beneficial to businesses in the north either and not help the Levelling-Up agenda as its supporters suggested. There are 189,642 properties in England with rateable values between £15,000 and £25,000, of which 47.7% are in London and the South.
Schurder says: “Any cut to business rates is of course welcome, but this proposal falls far short of what is needed by businesses to help them weather the cost-of-living crisis. Without fundamental changes to the way Small Business Rates Relief operates, only about half of the mooted 200,000 businesses would actually benefit from relief – with many more small businesses receiving no relief at all.
“This is because under the current system of SBRR only businesses with a single property in England qualify for relief. So small businesses which occupy two or more properties currently pay full rates and this would continue even if the threshold for SBRR is increased."
Housebuilding and Development
On the campaign trail, Truss has pledged radical changes to housebuilding policy to help millions of renters buy their first home by making it easier to prove they are ready to take on a mortgage.
Truss said to help “generation rent”, an upcoming review of the current system will allow rent payments to be used as part of the affordability assessment for a mortgage.
She has also said she plans to scrap national housebuilding targets.
While the Johnson government had committed to building 300,000 new homes by the mid-2020s Truss wants to “rip up the red tape that is holding back housebuilding” by abandoning this.
Councils will instead get to choose how many new homes their communities need. A Truss administration would “work with local communities to identify sites ripe for redevelopment and reduce planning restrictions", her team has said, "turbocharging commercial and residential development”.
Grant Leggett, director and head of planning consultancy Boyer’s London office, sees the statements at little more than hot air: “‘Rip up red tape that’s holding back housebuilding and give more power to local communities’ — that’s about as big an oxymoron as you’ll read anywhere — 10 out of 10 political-speak. It is up there with literally ripping up policy by introducing a National Planning Policy Framework in 2012 but at the same time creating multiple new strictures through Localism. This is sound-bite-ism and nothing new. Indeed this sort of rhetoric and the great planning White Paper of 2020 sought to do just this, but was arguably the beginning of the previous PM’s downfall.”
Truss has also talked about introducing a "landmark policy to create new towns".
Karen Charles, director and head of Boyer’s Wokingham office, says none of this is new. "It has formed part of Government policy since the birth of the planning system in the 1940s. The challenge is how to build new communities around new and growing industries. She quite rightly cites [Cadbury's "model village"] Bournville as an example but businesses are more transient than then, and cannot always be relied upon to deliver a consistent form of employment and the many benefits that stem from this.”
Unlike many of her colleagues in the Tory Party, in particular, her rival to be leader Rishi Sunak, Truss has a modest real estate portfolio.
Her primary residence is her family’s three-bed home in the market town of Thetford, Norfolk, where she lives with her husband and two daughters. She also owns an undisclosed estate in London.
First Steps
Over the next few days at her new address at 10 Downing Street, as the jubilation of victory wears away, she will face a cocktail of different crises, not least the rising cost of living and energy prices.
Ananya Banerjee, director and head of design, at Boyer, points out the immediate problem is she has been voted in by members of the Conservative party, not by the electorate as a whole.
"So she has two diametrically opposed audiences to appease: the Conservative voters in the shires to whom she owes her success; and the ‘red wall’ in the north and Midlands, the support of which she must gain to retain power at the next election. One set of planning policies will suit one, and one the other: suspension of housing targets, ‘listening to communities’ and the protection of greenfield sites in the south; infrastructure and investment in the north. Balancing the two will be tough.
“Liz Truss is stepping into some very big shoes at a time when many people are crying out for change and the housing crisis is impacting on a wider and wider demographic. She’s clearly aware that housing is, and has always been, a political football but I’m not convinced that she has the solution."