Government must consider combined impact of multiple policy changes on viability, warns the British Property Federation

The government should acknowledge how the combined effect of various changes to policy, taxes and regulations are impacting the viability of developments, a policy director at the British Property Federation’s (BPF) has said.

Speaking at the Cardiff Capital Region (CRR) roundtable earlier this week, Danny Pinder, director of policy for real estate at BPF, said the government must start “thinking holistically about the aggregate impact of the various different changes that are made” such as the introduction of the Building Safety Regulator and other post-Grenfell policy amendments.

Pinder said:  “There is a real issue that these decisions that impact viability, individually and in isolation, are all well-intentioned and reasonable but there is a gap in government about taking that step back and thinking holistically about how those things aggregate and impact developers in a real way.”

He gave the example of a scheme in Sheffield that originally showed £8.2m positive viability but after layering on five years of new taxes and regulatory changes, the same project became –£6.2m.

He added that the sector must “over-articulate” barriers to viability clearly and propose “creative” funding models, especially for upfront costs that can kill schemes before they start.

Other speakers suggested strategies to tackle viability challenges, such as the government taking equity positions as opposed to lending cash to de-risk development and leveraging transport and rail infrastructure to reinforce investment.

As the discussion centred around how to make Cardiff an investible region, Tim Stephen, property director at energy management consultancy Amber Energy, suggested marketing Wales as “land of the green” to overcome the impact of rising energy costs on viability.

He highlighted the “brutal reality” of energy inflation, describing how the cost of managing Amber’s 120,000 student beds has jumped from £5 to £15 per unit.

The proposed rebrand of Wales would mean leveraging its natural resources and low population density to attract green infrastructure investment and make schemes more viable by improving affordability from the tenant side.

CCR is a public body bringing together the ten councils of South East Wales. It works with the UK and Welsh governments, aiming to attract investment and grow the regional economy.