Prime Minister Theresa May has called a surprise snap General Election on 8 June in a “back me or sack me” move intended to strengthen her government’s hand in its Brexit negotiations. CoStar News catches up with property industry experts to test the initial response.
Making the announcement outside of Downing Street the Prime Minister said "division in Westminster will risk our ability to make a success of Brexit".
There will be a vote in the House of Commons tomorrow to approve the election, with two thirds of MPs needed to vote in favour for it to go ahead.
The pound lifted to a 10-week high following the announcement with Sterling up 0.85% against the dollar to $1.2674.
The pound had initially fallen half a per cent against the dollar this morning after it emerged May would make a statement outside Downing Street at 11.15am, without details being given as to the nature of the statement.
While the outcome of a snap election may bring welcome clarity for May’s government and ultimately investors in UK property - and that has been the focus of the initial response from industry commentators - it will mean the crucial last few weeks for transactions leading into the summer will be set against the backdrop of political uncertainty.
Melanie Leech, chief executive, British Property Federation said: “The Prime Minister’s decision to call a new General Election creates some short-term uncertainty at a time when it’s critical to maintain business and investor confidence. It should, however, provide the next government with a clear mandate to negotiate our future relationship with the EU and deliver the UK’s long-term economic health.
"Real estate is a willing partner for Government through this period as it delivers its industrial strategy and we have five key messages: work with us to maintain investor confidence in the UK and to drive growth; provide fair, competitive and stable tax, regulatory and planning systems; invest in infrastructure and free up public sector land; help us to address the skills shortage in our industry; and support more housing supply across all tenures.”
Walter Boettcher, chief economist at Colliers International, said: “With the calling of a snap general election, a new date has been entered into the European calendar of uncertainty. However, the long-term benefits of a clear governmental mandate to investors and occupiers will far outweigh the short-term hiatus in decision making that is likely to follow this announcement. Solid deals, already in progress, are likely to progress. New deals may slow between now and the election.
“Will the government receive the mandate that it plans? Given recent events, all bets are off.”
Gerry Hughes, chief executive at GVA, said: “Today’s announcement from the prime minister was surprising but not wholly unexpected. Whatever the outcome, we hope that the election will provide Government with a stronger and more unified mandate giving investors and markets greater clarity and confidence as well as opportunities for encouraging much-needed investment across the UK. Whilst we hope that the ensuing uncertainty is kept to a minimum, GVA will continue to grow and pursue its strong long-term trading ambitions.”
Jon Neale, head of UK Research, JLL UK said: “The announcement of a snap general election on 8 June is a genuine positive for the UK property industry.
“It will mean that a general election is no longer likely to coincide with the end of the two-year negotiating period following the triggering of Article 50. The Prime Minister will now be under less pressure to 'deliver Brexit' by 2020 - making a transitional phase more likely.
“The threat of UK businesses having to face a 'cliff edge' - a fall back to WTO trading rules and full customs controls with the European Union - has retreated. Companies will still have to make contingency plans, but there may be less pressure on companies to plan for a sharp exit without the 'deep relationship' that the current government wants with the EU being agreed. This should help improve confidence in the market. The residential market should benefit too, for similar reasons. However, much still depends on the course of the negotiations and the result of the general election."
Lewis Johnston, Parliamentary Affairs Manager, RICS, said: "Since the EU Referendum last summer, our market surveys across the residential, commercial and construction sectors show we have largely moved on from initial negative reactions, but uncertainty continues to cloud the outlook and weigh on market sentiment. Today’s decision does very little to change that prognosis in the near term and, if anything, we are likely to see continuing deferral of major investment and hiring plans.
"While Theresa May’s stated intention this morning was to provide greater clarity and stability by calling a general election, in the immediate term the move inevitably puts a question mark over policy and creates further uncertainty across the built environment. It is now the responsibility of all parties to set out clear policy proposals across land, property, construction and infrastructure to ensure the UK can deliver the homes, infrastructure, factories, offices and major building projects it needs to thrive."
Ed Cooke, chief executive at Revo, said: "The retail and property markets have been clearly impacted by political and economic uncertainty since last June, and generally speaking stable political systems benefit long term business decisions.
"The focus, rightly, will be on how a General Election impacts the UK's negotiations to leave the EU - but it should not be overlooked that already in 2017 we have seen the Government outline flagship policies to repair the UK's housing market and stimulate growth through its industrial strategy. Irrespective of the General Election result we hope the momentum to implement these policies, which have place-making and community investment at their heart, continues apace after June."
Dr Adam Marshall, Director General of the British Chambers of Commerce (BCC), said: “Many business communities will understandably be concerned that attention will inevitably shift from the economy and the intricacies of leaving the EU to a potential election campaign. Firms will want to be reassured that the key challenges facing the economy will be front and centre throughout any election period.”
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