Commercial real estate plays a fundamental role in fuelling economic growth, creating jobs and supporting communities. These properties are not just buildings; they are essential, diverse spaces where businesses, from shops and offices to factories, operate and thrive. The RICS 2022 Commercial Real Estate Impact Report illustrates that commercial real estate directly generates £66bn in GVA, over £15bn in tax revenues and employees more than 1 million people. For every £1 spent, the sector delivers a positive return of £0.91 in GVA.[1]
Yet the sector faces unprecedented change. The new government and industry must collaborate effectively and efficiently from day one to benefit people, businesses, communities, and society across the UK.
Below is the Royal Institution of Chartered Surveyors (RICS) response to the political parties' manifestos and plans, examining the known positions of the Conservative, Labour, and Liberal Democrats parties on business rates, high streets and regeneration through the lens of property. This article offers an overview, but these policies form just a small part of the commercial real estate sphere and as always, the devil is in the detail.
Business rates have a crucial role for funding local services, ensuring community development whilst shaping local economic areas. It is widely recognised that business rates are too high, too complex and too burdensome, suppressing growth and discouraging investment.
While the political parties offer different approaches, they share a common goal of reforming business rates to alleviate burdens on businesses and stimulate economic growth. The scale of this reform does differ from evolution to revolution, and the details and shape of how this looks post general election will be crucial. RICS's recommendations on business rates can be found in more detail below:
Meaningful reform of the business rates system
Reduce the burden of business rates administration
Support the valuation and administration of business rates
Improve professionalism in business rates services
Incentivise sustainable investment
Chartered surveyors play a fundamental role on high streets, they offer comprehensive support across various aspects of planning, design, development and management. They engage in strategic planning, collaborating with local authorities and stakeholders to devise tailored regeneration plans that align with community needs and urban development objectives. Utilising their design expertise, surveyors ensure that high street spaces are not only aesthetically pleasing but also functional and accessible. They conduct valuations to assess the economic viability of regeneration projects and provide guidance on investment opportunities, ensuring that resources are allocated effectively for long-term economic and environmental sustainability. Additionally, surveyors provide expert rating advice, helping businesses navigate complex business rates regulations and ensuring fair assessment, which is crucial for their financial stability. Surveyors oversee safety standards, conducting thorough assessments to ensure compliance with regulations and mitigate risks. They also play a pivotal role in property maintenance, devising tailored maintenance plans and overseeing their execution to uphold the integrity and appeal of high street properties. Surveyors manage leases, facilitating agreements between property owners and tenants to optimise occupancy and support diverse business activities. Through their multifaceted expertise, chartered surveyors cover all aspects of high street regeneration, contributing to the creation of vibrant, sustainable and resilient environments.
To effectively tackle the challenges that high streets face, there is a need to reimage and reanalyse the impact and role of both national and local government, as well as, the purpose, size and function of high streets. There is a need for a heightened national ambition and focus on commercial property, we need to unlock more investment, drive forward more bottom-up community initiatives, explore the opportunities and impact of sustainability, reform business rates and create policies promoting healthy user focussed buildings.
The political parties share a commitment to revitalising high streets, albeit through slightly different approaches. The Conservatives focus on improving business rates and wider regulatory changes. Labour aims for a structural overhaul of the business rates system, empowering community revamps, and large-scale urban regeneration. The Liberal Democrats emphasise support for small businesses and entrepreneurs, whilst replacing business rates with a Commercial Landowner Levy. These generally align with RICS’s advocacy for sustainable investment, reduced administrative burdens, and transparent for fair funding mechanisms, ultimately contributing to vibrant and thriving high streets. Later this year RICS plan to publish our Parliamentary Briefing Paper on Revitalising the High Streets. More depth of details is required across the board to understand and mitigate against the risk of unknown consequences of any such change.
The next ten years will be unprecedented for commercial real estate. The new government will need to work closely with industry to tackle the challenges discussed above, as well as other vital areas including the uncertainly around minimum energy efficiency standards (MEES), the lack of ESG compliant buildings and reforms surrounding the landlord and tenant act. We look forward to working with the new government on these issues and others.
[1] https://www.rics.org/news-insights/market-surveys/rics-commercial-real-estate-impact-report