In the modern landscape, political uncertainty has become an ever-present shadow on businesses of all sizes. However, it is the small and medium-sized enterprises (SMEs) that bear the brunt of this instability; it undermines the ability to plan, invest and contribute to the critical task of providing much-needed new homes. The industry is now faced with navigating a labyrinth of policy evolution and reversals, competing agendas, decreasing planning department budgets and wavering decisions.

Parul Scampion

Parul Scampion

The events of the past few years have collectively intensified economic uncertainty and undermined the stability needed for businesses to flourish.

The property industry has also been grappling with significant changes in the regulatory environment, with the ongoing changes to Building Regulations as well as additional regulation in relation to fire safety and net zero. Although there is no question that these issues need to be addressed, the ongoing regulatory uncertainty surrounding these areas and their application means that there is more risk when considering whether new projects can be delivered.

An example of how policy changes breed uncertainty is the two-staircase rule for buildings over 18m because of Grenfell. The safety of buildings is, of course, paramount, but this impending change has meant many proposed developments are no longer viable. No matter how far down the road in planning or pre-construction these developments are, developers have had to go back to the drawing board, redesigning the building and resubmitting plans.

Such uncertainty makes developers pause development, or the purchase of a site altogether, and many developers are now leaving the industry. This is particularly relevant when building on top of existing buildings given that fire safety enhancements are constrained by the existing infrastructure.

It is possible to have a situation where development improves the fire safety of an existing building but is still deemed non-compliant as it cannot meet all the fire safety requirements for new development due to the constraints of the existing building. The overall impact of this is delay to the delivery of new housing, at a time when many projects are already being mothballed due to viability concerns.

The challenges faced by property developers are not isolated incidents but rather symptoms of a deeper malaise in the system. For example, the post-Covid mismatch between the need for office spaces and housing supply is emblematic of the prevailing lack of synchronisation between policy and reality as many London boroughs still enforce use classes for employment or office use when the demand is simply not there; offices lie empty despite the desperate need for new housing.

The issue goes beyond specific policy changes and reversals and extends to the broader politicisation of housing. Housing targets have recently been watered down, and now prioritise the interests of local communities against the overarching need for new housing and infrastructure. This policy vacillation not only frustrates property developers but leaves local plans in disarray and new schemes on hold.

Moreover, the revolving door of housing ministers in the UK government (11 since 2010) underlines a glaring inconsistency in prioritising housing as a national issue. The lack of consensus and national debate on housing need, location and trade-offs only adds to the confusion. The result is a dearth of coherent housing policies that reflect the true needs of the UK.

The impact of political uncertainty is amplified during local elections, when developers refrain from submitting planning applications that could be deemed even remotely contentious. Experience shows that a scheme will be refused as councillors play it safe. Politicians are rarely criticised for not approving a permission and a refusal comes with the bonus of less paperwork.

With a looming general election in 2024, businesses are currently in limbo. Political change breeds even greater uncertainty, stifling investment decisions and economic growth. However, it does not need to continue in this way.

A possible solution lies in adopting a non-partisan approach to housing policy. Establishing a Royal Commission dedicated to long-term housing planning, with mechanisms built in to adapt to the ever-changing world, could provide the necessary stability. This commission would be more insulated from the short-term political pressures that often drive hasty policy shifts, enabling the formulation of housing strategies that cater to the true long-term needs of the country.

One of its first tasks should be a comprehensive overhaul of the current planning system. Swift reforms are essential to streamline the process and ensure that policies remain relevant in the face of a changing economy and working habits. Professionalisation, consistent targets and coherent policies that balance conflicting aims would be a step in the right direction.

To confront the housing crisis head on, property developers need unity in housing policymaking, a stable foundation around which to plan and deliver and an end to this current uncertainty.

Parul Scampion is chief operating officer of SME London developer Fruition Properties