BPF’s Melanie Leech on treating causes not symptoms

So from day one in power the pressure is on to deliver outcomes on the ground. Once they get the keys to Downing Street, however, they find out just how hard it is to do so. They don’t necessarily have the levers to turn a vision and a policy into an outcome.

It’s probably not surprising, therefore, that governments can’t resist the temptation to intervene and try and drive outcomes – to focus on the ‘how’ of delivery not the ‘what’. That rarely produces the result hoped for – and can be actively counterproductive.

I’d urge any politician to think long and hard on the question of when to intervene and when to resist the temptation. In trying to change things for the better, governments should focus on causes not symptoms.

Sometimes intervention is essential and arises out of exceptional circumstances – for example Covid-19 and the £300bn package of measures introduced to support individuals and businesses during the pandemic, going way beyond the normal boundaries of the state.

By contrast, consider the legislation within the Levelling-up and Regeneration Bill for high street rental auctions. Everyone agrees that empty premises are a blight. But surely they are a symptom of a problem not the cause. The proposal may resonate in Westminster: government is taking action. But it fails to understand the challenges that landlords and occupiers face on the ground and the myriad of reasons that our high streets and town centres are struggling.

Rather than keep retail units empty, there are numerous examples of landlords taking extraordinary action to attract occupiers, including charging no rent at all. But the units are still unviable for tenants because of the crippling business rates bill. Wholesale reform of business rates would be a much more effective contribution to reversing high street decline than high street rental auctions. Similarly, reducing the tax burden and simplifying the planning system for specific areas, as set out in the BPF’s proposals for high street accelerators, would be a much more productive way of seeing real change in our town centres.

Take another example: (almost) everyone agrees that we have an acute housing problem; that it seems increasingly out of reach for many to own their own home and that private rents are cripplingly high for many in our major cities. Step forward the Scottish government – adopting a similar interventionist approach in the residential market with the introduction of rent controls under the Cost of Living (Tenant Protection) Act in October 2022. Again treating the symptom and not the cause.

So what’s the result? Investor appetite to fund and deliver build-to-rent (BTR) homes in Scotland has been dampened and some now view the country as uninvestable, in turn making the cause of the problem, lack of supply, even harder to tackle. One of the key issues has been the way in which they were introduced. A failure to consult with industry has only exacerbated investor caution – how else might the Scottish government change the context within which they take long-term decisions?

It is a challenging time for the real estate sector with the industry navigating build-cost inflation, rate rises, the increasing cost of debt and ongoing policy uncertainty around planning. Interventions by government that are misguided and done in haste rather than in consultation add to our challenges and hamper rather than promote the economic growth and productivity our country desperately needs.

Melanie Leech is chief executive of the British Property Federation