Dear All
I hope you are all well and enjoying the lifting of COVID restrictions. I’ve been enjoying travelling in to the office again, sitting with everybody and just shooting the breeze. I will be visiting as many members as possible in the coming weeks and I hope that I’ll be seeing many more of you soon.
With the general reopening, AREF is moving back to in-person events with, wherever possible, an online option. Depending on the available technology this could be either hybrid participation or the distribution of a recording after the event.
In September we are looking forward to holding the first AREF Annual Dinner & Awards for three years, and my first as Managing Director. Pre-pandemic this has been one of the highlights in the real estate social calendar for over 20 years and this year we will be returning to an old haunt, the Savoy. We really look forward to seeing as many as possible of you there (click here for more information).
With the return to the new normal (which will not be the old normal), we have been reviewing AREF’s strategic priorities. Roundtables have been held with the Board, the Management Committee and the team. The output will be distilled and presented for feedback at our next Committee Day, taking place in May. The Committee Day has always been important in guiding the team’s activities and we look forward to the discussion (more details of the committee day will be emailed out to our committee and working group members soon).
While the way that we all work is changing again, many of the policy themes on which we have been working for the last two years remain. The most important ones which we will be taking forward this year are as follows.
- Liquidity. We are working with the IA and members on the implementation of the Long Term Asset Fund. We will also continue to work with members on the PIF, to which HMT recently gave backing. Linked to this is recent work on the UK Funds Regime and continued competition from other domiciles such as Dublin and Luxembourg.
- The issue of notice periods for daily-traded retail funds remains unresolved by the FCA. Many of the issues here overlap with those around the implementation of the LTAF. Particularly important is the ability of the service provider ecosystem to handle longer notice periods.
- CVAs have moved somewhat into the background with the imminent ending of the COVID eviction moratorium but they remain a threat to the attraction of UK property to investors.
- Since the Grenfell tragedy the government has put in place three measures to provide funds to remediate cladding and other safety hazards in buildings of 18 metres or more: the Building Safety Fund, the Residential Property Developer Tax and the Building Safety Levy. Recently DLUHC has been in discussion with housebuilders and materials suppliers on financing remediation of buildings between 11 and 18 metres. Alongside the BPF and other PIA members we remain engaged with government on the implementation of these measures.
- Leasehold reform. Government measures to protect residential leaseholders from onerous ground leases could have the unintended consequence of a transfer of value from pension savers to leaseholders. AREF, the BPF and members are acting to make sure that both residential leaseholders and pension savers are treated fairly.
- Sustainability reporting. While SFDR, SDR, TCFD and other standards work their way into fund operations, concern is growing about the perverse incentives these standards might provide in real estate, possibly encouraging the carbon-intensive development of new net-zero buildings and disincentivising retrofitting and a whole life costing approach which could result in lower overall emissions.
- The findings of the RICS Independent Review of Real Estate Investment Valuations were recently published and we will be helping members work through the implications.
- The delayed review of the 1954 Landlord & Tenant Act still looks likely to start this year.
I couldn’t finish this Newsletter without referring to the Russian invasion of Ukraine. Many of us are directly affected or have family members, friends and colleagues who are. AREF has been involved in discussion with the IA on UK Government sanctions on Russia, how the UK property funds industry can contribute and how the industry will in turn be affected. Aside from general market volatility and the disturbance of global capital flows, the main item likely to involve UK real estate is the fast-tracking of the Economic Crime Bill, which will introduce a register of the ultimate beneficial owners of property and land in the UK. Entities that do not declare the beneficial owner will face restrictions on selling the property and individuals may face a prison sentence. We will keep members updated on developments as we become aware of them.
Again, I look forward to seeing many of you in person soon for the first time in a long time.
Best wishes
Paul
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