The Subplot
The Subplot | Are Donald and Angela planning for trouble?
This month’s long read
- Donald and Angela are going to change your world. Here’s how
- Elevator pitch: your guide to what’s going up, and what’s heading the other way
Everything happening everywhere all at once
One day you’ll look back on March 2025, and smile. Honestly, you will. That’s the good news; the bad news is you’ve still got 25 more days of March madness to get through. Thanks to the combination of orange property developer-turned-president, Donald Trump, and Tameside’s own ginger scourge of planners and slapdash developers, Angela Rayner, for the property business it’ll be a belter. But maybe not in the way you expected.
Big ideas
Let’s start with Angela. This week we got the white paper on replacing leasehold with commonhold, next week we get the hugely hyped-up planning reform recommendations. Both could be dynamite under development prospects, or Angela herself, or both.
Planning for trouble
The Planning and Infrastructure Bill – expected to be unveiled next week – has always been a ticking time-bomb. Why? Because ministers have consistently chosen to blame a sticky planning system for poor delivery of houses and major infrastructure. So what happens if they rip up the rules and still nothing gets built? Planners and developers have long known the answer: they may have a point on infrastructure, but on housing much less so. Planning consents are not scarce, consent is permission to build not an instruction to get building, and when sites don’t get developed it’s usually for good commercial, not planning, reasons.
Plumbing error
The planning system introduced in 1947, and much tweaked since, was devised as a plughole for development, not a tap, and it can’t deliver houses with a wave of the legislative wand (Subplot, 5 Sept 2024). The political risks of choosing the wrong scapegoat for low housing delivery, and pinning so much on planning reform, are huge, and may begin to crystalise in the coming days.
Watered down?
The Planning Bill is a potential problem in another way. This new government has already developed a habit of announcing big plans, then rowing back. Today the air is heavy with chatter that the Planning Bill is going the same way. The risk is that whatever good was in it gets watered down until it’s nothing more than performative tinkering. Angela’s side-hustle as minister for changing employment rules shows she has form when it comes to backdowns. On zero-hours contracts, day one protection from unfair dismissal and fire-and-rehire plans have been softened and implementation postponed, the latest climb-downs coming on Tuesday this week.
Paragraph 125c
Behind the planning debate sits the simple hard math of building things, and Angela has been busy here, too. There have been some changes, which developers will welcome, although it’s not clear how far voters will welcome them when they realise what’s happened. For example, last week the government modified a tiny sliver of guidance on how to interpret paragraph 125c of the National Planning Policy Framework. The brutal gist is that economic benefits trump heritage costs if you’re redeveloping brownfield land. Hard-working families do not keep their eyes on updated guidance about NPPF paragraph 125c, but they do notice when, say, an old mill building comes down. This one is worth watching. See also recent guidance on what is or isn’t Green Belt.
Common mistakes
Much bigger tampering with the economics of development was implied by the white paper on replacing leasehold with commonhold, published on Monday. The proposal was to create a new form of commonhold, and when that’s done, to forbid the creation of new leasehold homes. Steps will also be taken to make it easier to convert existing leasehold blocks to commonhold by, for instance, making the trigger the support of 50% of residents. It’s much-needed, although a lot trickier to implement than it sounds, and as for banning new leaseholds, it depends when, and if, a new commonhold can be created. Even with that massive caveat, the white paper already opens the door to a fudge. Paragraph 4.3.2 says: “…we will consider the case for any limited exemptions, as well as arrangements necessary to ensure a smooth transition and protect the delivery of new, much needed supply. We will be launching a full consultation on a ban later this year.”
Wow wait what
So, more sound and fury signifying nothing? The British Property Federation was sufficiently panicked to issue an ill-advised statement explaining how leaseholders weren’t fit to perform like “professional freeholders” (a lovely way of saying rent collector). That many homeowners manage their home’s freehold without their heads exploding seems to have escaped the BPF’s attention.
Engines of growth
But there is a serious point, even if the BPF missed it. The fractional sales of leasehold flats has been a mighty engine for development in Northern cities: it is low risk for developers and, aside from the occasional headline-grabbing disaster, it’s low risk for buyers too. (At this point, commiserations to the 81 off-plan buyers who recently lost £3.5m at Liverpool’s Scholars Court.)
Fractions of success
If you turn the fractional-sales engine off, what does this mean for development? Answer: nobody knows. There is no other equivalent engine waiting to go on the same kind of scale. While the build-to-rent business is doing well – Knight Frank says investment rose 11% in 2024 to reach £5.2bn – it will never be right for every location. Tinkering with leasehold law might also do strange things to the value of blocks with residual leaseholds, and perhaps even stranger things to the price of buying a lease. Why buy Betamax when everyone is using VHS, as the old saying goes.
Going down
So much for Angela, what about the Donald? The impacts here are long-range but not insignificant. The main danger – apart from World War Three – is the dollar exchange rate. It’s fallen to a three-month low as Trump’s tariff plan gathered momentum and long-term overvaluation gets corrected. The dollar has been sliding off a peak since October 2024 ($1.34 to the pound, down to $1.27). Longer-term its been sliding since June 2015 ($1.57), but recently climbing in a small foothills kind of way since June 2022 ($1.09).
Weakness is good
A weaker dollar buys you more pounds and a foothold in a marginally less bonkers political environment. CBRE has been charting the trend: since the beginning of 2022, North American investors have contributed most to net foreign investment since 2022, with £8bn more purchases than sales.
Buying today
Big names like private equity house KKR are spending like they’ve the clock against them – and they probably have. This week KKR paid north of £100m for the 424-apartment development in Salford’s New Bailey in a deal with Legal & General. It was L&G’s first big punt on BTR, so symbolic of a changing-of-the-guard. Elsewhere KKR is in the midst of a £1.6bn bid for healthcare property business Assura – an interesting deal, which shows KKR thinks real estate is a tad over-valued, but by no means as over-valued as the stock market thinks it is.
It is, of course, silly to draw conclusions this early in the month. There’s three weeks to go, and anything could happen! But for now, Angela looks like a potential brake on the property market, and Donald a potential spur. Let’s compare notes in April and – if we’re all still here – see how it turned out?
ELEVATOR PITCH
Going up or going down?
A good week to join the stampede from offices to residential development, and a bad week for Greater Manchester’s Places for Everyone strategy. Doors closing, going up.
And then there were none
Greater Manchester’s messy strategic plan is beginning to look like a game of Cluedo. At first there were 10 boroughs in the plan, then Stockport committed suicide in the billiard room and we were down to nine. Now Oldham has had an accident with an iron, and it’s just eight.
The borough asked Angela Rayner (see above) for permission to pull out of the Places for Everyone regional strategy that was meant to turbo-charge growth – and perhaps it would have done until Metro Mayor Andy Burnham did a Professor Plum on the original plan in 2017, and it’s been downhill ever since.
The Oldham move comes at a big moment for the borough and its still co-operating neighbour Rochdale. The ambitious Northern Gateway planning strategy – which stretches across 1,600 acres in Rochdale and Bury, has just been green-lit. It will probably get its own development corporation.
Oldham and Rochdale are to share a £40m investment pot – not a lot, but better than a slap in the face – and developers are as keen as ever on the area’s logistics property potential.
Enter David Hughes, who left his post as Wirral Council’s director of regeneration a year ago, and has since been on a journey to becoming Oldham’s new director of economy. He won a deserved reputation at Wirral for unblocking and rethinking, and the new super-fresh leadership team at Oldham will no doubt benefit. Oldham has long had a surprisingly dynamic streak, and it’s a good fit. Life outside the Places for Everyone umbrella might not be so bad after all.
Less offices, more homes
It’s a sign of the times, in all kinds of ways, that workspace specialist Bruntwood is now dabbling in residential.
Bruntwood added 300 homes to its plans for the 220-acre Booths Park in Knutsford. They will be between the offices and the town itself, to the north. “It’s no secret that there’s a real need for great housing in the area,” said a Bruntwood release breathless with excitement. Below the line comment on Place North West suggested this was all a bit last-minute, a sudden conversion to residential before a planning application goes in.
Bruntwood isn’t alone in making a dash to housing. Oval Real Estate slashed 100,000 sq ft of offices, and replaced it with 400 apartments at its proposed redevelopment of Albert Bridge House in Manchester.
You could see this as a wise pivot to a growth sector. Or you could see it as the latest stage in the slow, painful retreat from the received wisdom that sparkly new offices are likely to be a winner, fingers crossed, any day soon.
Get in touch with David Thame: [email protected]
