Labour Victory: The Implications and Opportunities for Private Capital Investing in UK Real Estate

So, the results are in, but what lies ahead for private capital investing into UK real estate following Labour’s victory in this week's UK general election? Here we share our initial thoughts on how the change in government might impact the UK real estate market.

Welcome planning reform to accelerate data centre and biotech developments

In their manifesto, Labour pledged to reform the planning regime and slash red tape to make major projects faster and cheaper in a number of key areas. A welcome focus is on removing planning barriers to the development of new data centres.

The UK’s existing planning frameworks are silent on the data centre sector, meaning the planning process can be arduously slow and lacking in clarity. Such level of uncertainty and delay is, of course, diametrically opposed to the need for PERE investors to move quickly when deploying capital in this highly competitive market and the race for scale to support the UK’s AI and tech ambitions. 

The Labour Party has also promised to increase resource and update national planning policy to make it easier to build laboratories, digital infrastructure and gigafactories throughout the UK. We expect these commitments will also reduce planning uncertainty and generate further investment in these trending sectors.

Development – “get Britain building again”

Labour has created an air of optimism for developers through their pledge to “get Britain building again”, the potential for “new towns” and a promise to prioritise building on brownfield sites, whilst also releasing “grey belt” land within the green belt where necessary. Coupled with Labour’s commitment to build 1.5 million new homes during this next parliament, the years ahead may provide ample investment opportunities for those looking to deploy capital in new projects and urban regeneration. 

Bricks-and-mortar retail revival 

The Labour party has promised to breathe new life into UK high streets by replacing business rates with a new system that will “level the playing field between the high street and online giants.” Stakeholders cautiously await the release of the detail around these policies from Labour, which will shed light on how they plan to fulfil these promises, but this proposal may bring hope to the bricks-and-mortar retail sector, which has faced challenges in recent years. 

Post-electoral certainty and interest rate drop?

With the election now over and uncertainty that comes with an election period falling away, investors can plan and prepare for the future with a greater degree of confidence. Clarity will further increase in the coming months as Labour unveils details about the policies needed to implement its manifesto pledges. 

The post-election landscape also strengthens hope (and, dare we say it, expectation) for interest rate cuts, following commentary that the election may have been one factor in the Bank of England’s decision not to cut rates in June. Taken together, the political certainty and prospect of interest rates reducing builds confidence and should stimulate further investment in the UK real estate market. 

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