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5 ways the CRE industry can prepare for life after the General Election

Learn how to confidently prepare for post-election life and stay ahead of the curve.

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If Brits are good at one thing, it’s sitting with discomfort. Whether it’s the discomfort of living without air conditioning through the summer months in an increasingly sticky climate or waiting on the results from the General Election, you know what? We’re well-practised. And luckily, we’ve got the Euros, even if watching isn’t exactly a relaxing affair. 

But for commercial property owners keen to get ahead of the curve, here are some last minute steps you can take to avoid the discomfort of potential political changes following the general election:

Stay Informed

Keep up-to-date with political developments, party manifestos, and likely policy changes. Understanding the political landscape can help you and your teams anticipate potential impacts on the commercial property market. The more informed you are, the stronger your risk management will be.

While we can’t predict how fast a political party will pass draft legislation, we can stay informed about changes that will impact your assets and portfolios. A direct example is Martyn’s Law, a particularly anticipated piece of legislation and one that will affect commercial spaces, and retail destinations, in particular.

The draft legislation, formerly known as The Terrorism (Protection of Premises) Bill, sets out what venues and commercial spaces in the UK must do to keep the public safe.

The campaign was brought to the government’s attention following the campaigning of Figen Murray, the mother of Martyn Hett, who sadly lost his life in the Manchester Arena terrorist attack in May 2017 among many others. You can find out everything you need to know about Martyn’s Law here to prepare for any public safety measures likely to come into practice.

Review Leases and Contracts

Now might be the perfect time to get your legal teams on standby to update any leases that could be affected by potential changes in government. Many hope, and have done for a while, that amendments will be made to the Landlord and Tenant Act 1954, that will affect Turnover Rent and ESG.

With 70 years since the Act passed, it’s often debated how fit for purpose it is, especially in relation to Turnover Rent. With Turnover Rent depending on how well a tenant’s business does, section 34 of the Act currently ignores a tenant’s business performance when setting rent for a renewal lease. Instead, it uses an open market valuation, imagining a deal between a willing landlord and tenant, to prevent inflated rents due to the tenant’s ongoing occupation. Many legal commentators have been raising the alarm on this issue.

Similarly, with ESG initiatives being a key focus for the property sector, the act currently isn’t adaptive to ensure that ESG initiatives are not undermined.

While uncertainty around any changes and timelines for reform, why not get your teams to check all current agreements and contracts to ensure they’re flexible enough to handle regulatory or economic changes. 

Consider adding clauses that allow for adjustments that will protect your asset or portfolio’s best interests. Getting ahead of the curve will pay off in the long run.

Financial Planning

Now’s a good time to ensure your financial reserves are in the best place to handle any potential increases in costs, higher taxes or regulatory compliance expenses. It’s worth tightening up your financial strategy, to ensure flexibility in case of changes in interest rates, foreign investment policies or lending conditions. Having the ability to access this data from an asset or portfolio view is particularly helpful. 

While we know, for example, that Labour plans to replace the business rate’s system as they believe it disincentives investment, creates uncertainty and places an undue burden on UK high streets, we don’t yet know what this will look like. What they’ve promised is that businesses will be able to raise the same revenue but in a fairer way, levelling the playing field between the high street and online giants, while incentivising investment, tackling empty properties and supporting entrepreneurship.

In the current climate that lacks clarity, to find out each party’s business rates, and the specifics of their manifestos, the Royal Institute of Chartered Surveyors have got you covered.

Stay Connected

Keep that line of communication open with your tenants, investors, and any other stakeholders connected to your commercial property. Understanding their concerns and expectations can help you spot any areas that will need extra risk mitigation.

If you’re not sure how to connect all relevant parties, now might be the time to look at adopting the type of technology that improves efficiency, reduces costs, and enhances property management. Staying ahead of industry trends can provide a competitive edge regardless of political changes.

Sustainability and Compliance

It’s no secret that minimum energy efficiency standards (MEES) and the lack of ESG-compliant buildings will be key issues for any potential new government. It’ll also come as no surprise that it’ll be commercial property owners who will be responsible for ensuring compliance with any potential new environmental regulations. 

Taking these measures before it’s too late will not only reduce future costs but also enhance the attractiveness of your asset or portfolio to tenants and investors who prioritise sustainability. 

While the increasing focus on sustainability and environmental standards could lead to higher costs for developers and owners, it will no doubt enhance the attractiveness of your asset or portfolio to tenants and investors who prioritise sustainability.

Getting your ducks in a row ahead of the General Election doesn’t need to be a huge lift. It’s more about having a sense of awareness that helps better prepare you for the uncertainties and opportunities that political changes may bring, while protecting your investments. The decision made on the 4th July will have impact, regardless of the winning party – so shoring up strategies in the short and long-term is paramount.

 

If you’re wondering how to connect your CRE community to communicate any potential risk to your property, speak to one of Mallcomm’s CRE experts today.