The Kings Speech: what it means for the real estate sector

What is the Kings Speech?

Whilst to many it is the title of a rather good film starring Colin Firth, it should have a different significance for the real estate sector.

At the start of each new parliamentary year the monarch delivers a speech from the throne in the House of Lords which outlines the Government's agenda and policy priorities for the upcoming session. The speech, written by the government and delivered on the 13 May by King Charles, promised legislation in the current parliament which will affect the sector.

We have seen several changes recently, are there more?

Yes, this parliamentary session promises there are more to come. What we know about these so far are set out below.

New rail route between Liverpool and Manchester

The Northern Powerhouse Rail Bill aims to give better transport links into Manchester Airport. The new route is in the second phase and will give opportunities for redevelopment of the surrounding areas. It is expected to run through Warrington and hopes to cut journey times between the cities.

Better infrastructure to support new homes

A significant point for developers, investors and landowners is that the speech indicates there is a plan to use major infrastructure investment to unlock housing and economic growth.

A reform of the process of appointing companies to provide water services in an area is one of the provisions in the Clean Water Bill. This will enable new companies to be appointed for new developments so that water infrastructure can be built quicker. This in turn will help speed up the delivery of new homes. It is hoped this will unlock sites that are currently constrained by a lack of capacity in the wider network outside of new developments.

The Highways (Financing) Bill aims to bring in private investment to fund major infrastructure projects to, in turn, accelerate development by making more land viable for development.

These provisions could make strategic land projects more attractive.

Surcharges on overnight stays

Mayors and local leaders will be given powers to raise revenue for their areas in the Overnight Visitor Levy Bill by imposing a surcharge on overnight stays. The money raised will then be used to improve their area. However, the hospitality industry is not happy with the prospect of having to collect a further tax which they expect to amount to 5% of accommodation costs. They warn this could cost 33,000 jobs and £1.8 billion reduction in tourism spending.

Protecting social housing stock

A change to the eligibility criteria for the right to buy is introduced in the Social Housing Renewal Bill. The draft bill, which only applies to England, is already being considered by the House of Commons and includes an exemption of 35 years for newly built social housing as well as repealing unimplemented provisions from previous legislation. It is hoped these measures will reduce bureaucracy and encourage social housing providers to invest in new social and affordable homes.

There is also an indication that investment in affordable and social housing will increase, which may create more opportunities for partnerships or joint ventures between developers and registered providers.

Commonhold and leasehold reforms

Our recent article 'Commonhold reform: what the draft Bill tells us' reported on the contents of the draft bill which was with the Commons Select committee for consultation. The speech confirms that the final bill is set to be introduced in this parliamentary session. It also proposed changes to the Leasehold and Freehold Reform Act 2024 to make it cheaper and easier for leaseholders to extend their leases or buy the freehold, together with a new right to request improvements such as gigabit-capable broadband.

The select committee's report which was published just after the speech advised that the changes should be brought in earlier and suggested further additions. The government's response is expected by the end of July.

Developers will need to consider how the changes proposed will impact on their management regimes and what their ultimate exit-strategies will be once all units are sold. The proposals will also affect valuations for investors and lenders.

Building Safety reforms

As had been anticipated, with the aim of speeding up the removal of unsafe cladding, the Remediation Bill will make construction product manufacturers pay towards remediation. It will also introduce a duty to remediate on landlords and give regulators powers to enforce. A remediation backstop will be set with power to step in to remediate being granted, it is suggested to Homes England. A register of buildings 11-18 metres in height will be introduced and gaps in previous legislation fixed. Finally, the method of assessing the fire risk of external walls will be mandated.

Energy independence

Provisions for landlords to invest in home upgrades are due to be included in the Energy Independence Bill. This will benefit tenants by cutting their energy bills by 2030. The bill also proposes measures to speed up grid infrastructure, land access and network consenting. Like the Water Bill this is hoped to speed up the development of new houses.

Conclusion

The next parliamentary session, which runs until the summer of 2029, will undoubtedly bring further change for the real estate sector at a time when the market is already adjusting to or preparing for several significant reforms:

• Renter's Rights Act
• Building safety levy
• Registration of contractual controls, and
• Ban on upward-only rent reviews.

There are however within the measures announced opportunities for both housing and economic development which will benefit some within the sector. What is clear is that delivery and investment into the living sector remains a key government focus.

Nevertheless, it is a challenging programme to achieve is in a relatively short space of time so there is a possibility that not all these bills will reach the statute books.

At Womble Bond Dickinson, we will continue to monitor progress to give our clients the best advice possible.