Get ready for the Barker Review and the Planning Bill
Even without a crystal ball, the flurry of activity at the end of 2003 gives an indication of the key themes likely to preoccupy the property sector and the legal sector in 2004.

  •  Following the interim Barker report in December, a review into the underlying causes of the inadequate housing supply in the UK, final policy recommendations are promised in March.

    The report examined the interaction between the house building industry, planning system, and government policies and has identified delays in the planning system, nimbyism and skills shortages in planning and construction.

    The planning system is seen as reactive and negative rather than as a positive tool for change.

    If it is a cultural change that is required, then we could be talking about a long-term strategy for boosting the output of housing.

    How does this square with Barker's contention that the UK needs an extra 39,000 homes a year, an increase of 28%, just to keep pace with demand? She is likely to call for the release of more land and tax incentives to encourage institutional investment. This threatens a fresh row with environmentalists.

    Social housing provision has declined because the private sector has not filled the gap left by the public sector, notwithstanding government intervention with ever-increasing affordable housing quotas which have bogged the system down in lengthy quota negotiations.

    A key element of the government's agenda for speeding up the planning system is due to become law this spring. But a late amendment to the Planning Bill quietly reintroduces the spectre of development tax, permitting lump sum payments instead of section 106 agreements. Developers are concerned they will have little say in how tariffs are fixed or spent and are angry that such a radical proposal has a short consultation period.

  •  What a difference three years can make. In 2000 my firm and Helical Bar jointly sponsored some independent research which called for a UK REIT-type structure. The Treasury made it clear that it was not interested and the UK REIT was described as a 'dead horse'. However, aided by effective industry lobbying, we now have a positive response.

    The optimistic view is that we could have a structure in place by April 2005 but the timing, regulation and the potential benefits are uncertain. REITs must not be limited to residential aimed solely at increasing housing supply. REITs suit income-producing investment companies but are unsuited to development companies and housebuilders.

  •  As 2004 progresses, the impact of the new Stamp Duty regime will become clearer. The indications going into the new year were that tenants were absorbing the higher rates of tax but there is widespread expectation that the additional costs will ultimately rebound on the landlord. And if the market itself and Stamp Duty were not a sufficient dampener on lettings, there looms the threat of legislation against upward-only rent reviews.

    With a decision likely to be made by the end of the year, the voluntary commercial lease code does not have much longer to demonstrate results. Initial research is likely to show that, although many tenants were offered alternatives to upward-only reviews, they rejected them on cost grounds. If tenants are unwilling to pay, why penalise the landlord? Undoubtedly legislation to enforce two-way rent reviews could severely disrupt investment in UK property from landlords and lenders at a time when new investment is needed.

  • Money laundering regulations will continue to be a preoccupation. New rules force accountants, lawyers and estate agents to report suspicious transactions or risk heavy fines or jail. This is causing a headache for auctioneers who, faced with the prospect of having to check the identity of purchasers, are debating with solicitors over who should bear the risk of auction deposits which are traditionally paid direct to the auctioneers.
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