Having adaptable space and a business nimble enough to change quickly is paramount in the post-pandemic environment. However, adapting properties is no small – or quick – undertaking and there are significant administrative hurdles to overcome.
The whole planning process still greatly vexes all. Three fifths (60%) of respondents to Crowe’s Real Estate Snapshot survey saw government regulation as the greatest barrier to adapting their commercial real estate, followed by economic uncertainty. The aftermath of Covid-19 and the high turnover of housing ministers have worsened the timeline for getting transactions approved, done and registered.
There is more red tape hitting the industry, particularly within the environmental, social and governance (ESG) arena. For instance, properties will need to meet certain minimum energy efficiency levels by April 2023 in order to continue to be commercially let. For landowners who are overseas incorporated or overseas residents, there is an immediate requirement to register with Companies House before January 2023 or face penalties.
All these regulations arrive alongside the Land Registry’s existing backlog in processing land titles. While the proposed digitalisation of the Land Registry will help, this is merely a sticking plaster compared with the whole level of regulation that the industry finds itself facing.
Arguably, reform of the planning system has been a government priority for many years – but with little tangible implementation. Removing substantial regulation once implemented is difficult, as it clearly serves some purpose. So, the tide of regulation is going to take time to change.
It would be refreshing to see ‘carrots’ rather than ‘sticks’ being implemented by the government. For instance, there is a clear business case for the government to introduce ‘green’ capital allowances or a tax credit system alongside the existing innovative tax credits available under R&D to support the ESG agenda.
More reward, less red tape?
Caroline Fleet is partner and head of real estate at accountancy firm Crowe
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