What a Hung Parliament Means for the Construction Industry

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What a Hung Parliament Means for the Construction Industry

Industry leaders have been reacting to the unexpected result of yesterday’s General Election, reflecting on the uncertainty it will bring to the country.

Brendan Sharkey, head of chartered accountants MHA MacIntyre Hudson’s Property & Construction sector, believes little will change in the short-term, but that it may mean the so-called ‘hard Brexit’ is less likely to happen.

He said: “Once sterling has fallen, along with the stock market, we’re likely to see more hesitancy, unlike post Brexit which seemed to be a stimulus for economic activity. Many longer term investment decisions by UK and international corporates will be put on hold.

“The Conservatives white paper, Fixing our Broken Housing Market, was very much the heartbeat of their election manifesto with a few tweaks towards more intervention with local authorities. The white paper was not considered revolutionary, but it was recognised as a genuine attempt to deal with the housing shortage.

“We would like to think that, come the autumn, whoever is in power will stick to the basic principles, if not improve on them.”

In the construction and real estate sectors, according to Brendan Sharkey, we can expect to see:

  • Sterling fall against the major currencies, facilitating UK assets such has London housing stocks and commercial property being cherry picke
  •  Stagnation, if not a slight fall, in house prices across the UK
  • Local authorities trying to take more control over the delivery of affordable housing
  • Less volume in house sales, which will lower the Stamp Duty Land Tax take for the government
  • Build to Rent to continue apace, as the rental market has not gone away. The companies in this market may find less competition for quality sites

Brendan went on: “Both the Conservatives and Labour recognised the need to build new homes, and the only difference between them was how many, and by when. The Conservatives out-bid Labour by committing to build 1m homes by 2020, with an additional 500,000 by 2022. Such targets are unlikely to be met while we have this political vacuum.

“The construction industry is forever plagued by leadership and policy changes as most infrastructure projects cross over elections, meaning there is never clear water to steer towards.

“The good news is that the hard Brexit fundamentals may be softened, reducing the concern over an adequate labour supply to build the housing we need. The sheer cost of moving along with lower net incomes due to inflation and job insecurity could also mean more extension and refurbishment work for the SME builders.”

NFB response

Responding to the General Election result, the National Federation of Builders (NFB) has urged all parties to work cooperatively for the good of the country.

Richard Beresford, chief executive of the NFB, said: “Now, more than ever, political parties must set ideological differences aside and put country before party.

“Any new government will need to focus on putting SME builders into a better place to build the homes and train the skilled workers the UK needs to succeed, as well as allowing regional economies to prosper.”

He asked all parties to get on with the job of fixing broken housing policies, reforming public procurement, fostering home-grown talent, and enabling SME builders to grow and flourish.

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