Prime Minister Rishi Sunak has announced a surprise summer General Election, with a date of 4 July, American Independence Day, pencilled in.
This article will be updated with responses from the property industry.
There has been consensus among pollsters and political experts that Sunak's Conservative Party is likely to be replaced by the Labour Party, but there is plenty of time for that to change in the remaining period of hustings.
While the period leading up to an election typically leads to a pause in transactional decisions in property and investment markets, there will be hope that a strong victory by one party will unlock a muted period for deals.
But what would a Conservative or Labour Party with a strong majority mean for the country? And what would either with a weak majority mean? Much more will become clear as the General Election manifestos are finessed and debated vigorously by each party in the coming days.
Mat Oakley, head of commercial property research at Savills, played down the likely impact on transactional activity saying "ultimately political change seldom impacts the commercial property market".
"The UK is one of 40 countries that are likely to have an election in 2024, and the question always comes round as to whether this heightens investor uncertainty. Our analyses suggest that transactional activity is generally lower than normal in the three months prior to the election date, and then recovered in the following six-month period. There is little evidence that a UK general election has ever had a measurable impact on commercial property pricing."
Walter Boettcher, head of research and economics at Colliers, described the timing of the election as "hard to fathom" given that the latest inflation readout from the ONS suggests that a rate cut between now and the election is unlikely.
"Huw Pill, the chief economist at the Bank of England, told us a week or so ago that it would be ‘ill-advised’ to expect a cut at the June meeting. Logic suggests that an early December slot might have been fortuitous given that economic growth is expected to accelerate toward the end of the year as interest rate falls and business activity levels strengthen. On the other hand, the Prime Minister may be thinking that a gauntlet may now have been set putting Labour in a ‘deer in the headlights’ moment from a policy perspective, It is hard to reckon."
Speaking to CoStar News as he unveiled full-year results, London listed developer GPE's chief executive Toby Courtauld said: "We will remain avowedly apolitical. It does not matter to me who it is so long as they are broadly central, which tends to mean they are broadly business friendly. By and large that is seemingly what we have got. More relevant to us is local government and 66% is broadly Labour in London already so a change to Labour nationally would replicate this. I do not think it will have much of an impact other than sometimes change is as good as renewal."
Melanie Leech, chief executive of the British Property Federation, said in a statement that bringing forward the vote would help provide welcome clarity: “Investors need certainty. An earlier election will give us that and is a golden opportunity to reset the relationship between the real estate sector and the next Government, as called for in the BPF’s manifesto ‘Building our Future’."
But there are wider implications for real estate in terms of its social and sustainable aspirations, and for the country as a whole after a long period of turbulence driven by a range of sometimes unexpected events.
The BPF’s 2024 Election Manifesto, Building our Future, is available here, and calls for a new partnership between the property industry and the next government to tackle four key policy areas: Building for Growth and Productivity; Building More Homes; Building Stronger Town Centres; Building the Green Economy.
The Royal Institution of Chartered Surveyors said in a statement: "This must be an election that puts the built and natural environment at its forefront. We need ambitious but realistic plans to deliver more affordable homes and create vibrant, place-driven communities while ensuring our commitment to meeting net zero."
The recent party conferences saw pointers to differences between the two leading likely administrations.
At the Conservative Party conference the Prime Minister announced the cancellation of future phases of the massive HS2 transport project, allocating £36 billion to be spent on a new "Network North" of infrastructure improvements.
Levelling Up, Housing and Communities Secretary, Michael Gove , focused on the government's Long-Term Plan for Housing which wants to build up to 56,000 new homes on brownfield sites and a Long-Term Plan for Towns that proposes ploughing £1.1 billion of investment into 55 towns.
Prime Minister Sunak has rowed back on commitments to net zero, particularly in regards to requirements on landlords to upgrade the energy efficiency of their residential properties.
The Labour Party placed real estate as one of its key focuses at its conference fleshing out a house building policy that includes a 1.5 million new home target.
It committed to planning reform and brownfield redevelopment and a commitment to net zero carbon was touted as key to creating economic growth including a pledge to deliver a clean power system by 2030.
Angela Rayner, the shadow secretary of state for levelling up, housing and communities, updated on a commitment to creating 'non-identikit' new towns at this week's UKREiiF property conference in Leeds.
In April, the party unveiled a five-point plan it said would "transform the landscape of the UK’s high streets".
Of particular interest to commercial property investors was a pledge to replace the existing business rates system with a fairer framework of “business property taxation”. It said it would aid high street retailers by leveling the playing field between traditional bricks-and-mortar businesses and their online counterparts.
John Webber, head of rating at Colliers, argues that the party has been less clear about what this system of business property taxation would be and when pushed to clarify, has failed to come up with any concrete plans. He says this is a "highly worrying" scenario considering we are close to the general election and a potential Labour government.
That said, Webber is clear that successive Conservative governments have promised to reform the tax, but none have delivered, just making the system more onerous and expensive for the ratepayer as time has gone on.
"Whilst it is encouraging to read of Labour’s aspiration to breathe life back into our high streets, unless they tell us what they plan to do, how can anyone scrutinise their plans or take their calls for change seriously?"
In April, Labour leader Keir Starmer also outlined five "golden rules" for "grey belt development" to bolster house building.
Colliers' Boettcher says of the differences a Labour Party victory would bring compared to the Conservative Party that experience suggests that "seldom are government policies aimed directly at commercial real estate. Usually, the impacts we feel are incidental."
But he suggests a few noteworthy exceptions.
"Labour may target aggressive tax avoidance structures and private equity remuneration practices (carried interest). This could work to undermine the already weak trajectory of real estate investment in a few asset classes.
"The residential market will be a target as housing is one of Labour’s key raisons d’etre. Look for more tenant protection but rent caps on the initial level of new leases look less likely given the experience in Scotland and the decline of BTR development. Social housing may receive a welcome boost.
"The good news is that increasingly it looks as though there is a cross party consensus on regional regeneration and development, especially a recognition that that long-term projects have to be able to pan beyond a single parliament. This was also a view expressed at the discussion at UKREiiF this week. Hence, the devolved local combined authorities will very likely be retained as efficient structures for driving the ‘levelling up’ agenda forward. The recent Teeside mayoral election demonstrates that local control and progress may trump party politics. Nevertheless, ideological differences could change how the finance is handled. Levelling up may be here to stay but is likely to rebranded again."
Boettcher adds that he hopes that the recent legislation on the Reserved Investor Fund survives any change in government. "This has the potential to supercharge regional regeneration and development.
"The greatest worry is that Labour may find themselves in power without having completed their ongoing policy review. I also wonder about Labour’s foreign policy plans in light of numerous growing threats."
Spencer McCarthy, chairman and chief executive of Churchill Retirement Living, said in a statement the next government must urgently rethink Westminster's relationship with older people – starting with the appointment of a dedicated Minister for Later Living.
“An ageing UK population, coupled with a creaking NHS and insufficient housing provision is creating a perfect storm for a demographic so often cruelly forgotten by policymakers. A dedicated Minister for Later Living should be briefed to act on the links between all departments to put older people front and centre.
“Indeed, they might start by looking at recent research from WPI Economics which shows that discharging elderly patients to retirement living communities already saves the NHS £93 million every year and frees up 167,000 bed days – and that hitting just 10% of the overall new housing target for the next decade would bring the total NHS savings to £135 million per year, or more than 242,000 bed days.”