Property predictions 2024
Uncertainty has been the watchword for the real estate sector for the past 12 months but how will that change in 2024?
Here are our thoughts for the commercial and residential property landscape for the year ahead.
Biodiversity net gain
The long-awaited Biodiversity Net Gain (BNG) regime is expected to materialise in February 2024, having been delayed on two previous occasions.
All development, including residential developers, will be required to deliver a mandatory 10% improvement to natural habitats to offset the impact of that development. Planning applications will need to outline how the loss of habitat will be mitigated by improvements to parts of a site, by improvements to off-site land, or through purchasing BNG credits with third parties delivering biodiversity improvements.
Developers and third parties will be required to manage those improvements over a 30-year period.
Little guidance from Government has yet to materialise and many questions remain, particularly around the tax position of those involved in BNG. The next 12 months will see a period of bedding down and with many questions still to be answered.
In addition to the BNG regime, residential developers continue to face challenges in housing delivery following continued uncertainty surrounding the nutrient neutrality rules. The Government in late 2023 promised clarity and reform, but that has failed to materialise. It will continue to hamper developers across large parts of the country.
We can also expect the residential property market to be front and centre of the imminent General Election, rumoured for the late Autumn of this year. First-time buyers are likely to be courted by the main political parties with renewed promises to build more homes. Whether targets of 300,000 new homes a year will be met remains open to question.
UK commercial property has from an international perspective looked relatively cheap largely in part to the weak performance of the Pound. International investors with cash to invest will no doubt continue to take advantage, with prime locations and quality office and retail space in demand. That will likely continue throughout much of 2024.
The warehouse sector – alongside desirable hotel assets particularly in prime locations – will also continue to be in demand from occupiers and investors.
However, offices and retail with poor environmental performance and in difficult locations will likely continue to struggle, with owners and investors encouraged to explore new uses.
And finally, we can expect considerable political change both here in the UK and overseas. The date of the UK General Election has yet to be announced, although rumoured for late autumn, but we will begin to have a taste of what is in store when the Chancellor delivers his spring Budget on 6 March. We should not be surprised if considerable tax giveaways are announced.
Labour too has begun to set out its stall, promising the reintroduction of housing targets and raising the prospect of reform of agricultural property relief and business property relief.
The main political parties will step up activity in coming months and the Kreston Reeves Property team will be at hand to provide guidance and insight along the way.
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