Housing association L&Q is putting new schemes on hold as new data from the RIBA and from property investors underlined how Brexit uncertainty was having a detrimental effect on the industry
The housing association – which has said it wants to build 100,000 homes in a decade – this week told staff it had decided to ’pause taking on new projects for the moment’ as the housing sector was ‘operating in one of the most challenging environments in recent history’.
Chief executive David Montague said: ‘Although the outcome of Brexit is still unknown, the uncertainty it has created has resulted in a serious downturn in the housing market. On top of this, we face ever-growing costs to meet new government guidelines on fire safety and to deliver on our quality promise.’
He added: ’We have already slowed our development programme and will now pause taking on new projects for the moment … We are in active discussions with our partners and the government to ensure that we can overcome market obstacles and do everything we can to keep building quality new homes.’
The L&Q decision comes after a survey of more than 1,000 UK-based property investors found that 55 per cent had paused investment plans over the past six months. The UK is currently scheduled to leave the EU on 31 October, an extension on the initial deadline of 29 March. But with no exit plan agreed and many MPs set against a no-deal Brexit, uncertainty continues to reign.
Six in 10 respondents to research commissioned by property specialists Experience Invest said they were waiting for the 2019 Autumn Budget – usually in November – before pressing ahead with plans.
Experience Invest’s business development and acquisitions director Jerald Solis said: ‘Our research clearly shows many property investors are now adopting a wait-and-see approach as the Brexit deadline draws near.’
While this suggests no immediate end to the current malaise in the industry, Solis looked for a silver lining.
‘There could be a surge of activity once Brexit materialises,’ he said. ’Once the dust settles, investors are evidently preparing to spring back into life, which could result in far greater activity across the UK property market.’
In the meantime, developer inactivity is affecting architects.
The RIBA’s latest Future Trends survey of members showed that 23 per cent feared their workloads would drop over the three months to November. This is the highest proportion since the same figure was reached in January.
With a similar percentage of respondents anticipating a rise in work, the balance figure dropped to zero – only the second time in two years that the profession as a whole hasn’t been optimistic about future workloads.
Small practices were by far the most pessimistic. Those with 10 or fewer staff recorded a negative balance for future workload expectations while medium and larger firms had a positive balance.
While private housing work was predicted to rise by marginally more respondents than forecast a fall, all other sectors of construction were viewed negatively overall.
About eight in 10 people surveyed thought headcount would remain stable at their organisation, with one in 10 expecting a rise and the same number predicting a fall.
Yet more than one in six architects questioned told the RIBA they were ‘personally underemployed’ at the moment, raising questions about the sustainability of current staffing levels.
RIBA head of economic research and analysis Adrian Malleson said: ‘Many respondents to our Future Trends survey have drawn attention to issues attributed to Brexit. These include a falling pound causing increasing costs; lowered margins and fee income; and projects failing to move beyond feasibility studies.
‘Some practices, while acknowledging these are challenging times, explained how they have made themselves more resilient: concentrating on high-quality work, investing in marketing and emphasising high levels of client service.’
In August, the outgoing RIBA president Ben Derbyshire said the institution had ‘consistently raised with government how detrimental [a no-deal Brexit] would be to the industry and the profession’.