Earlier this month Joanna Deffley attended the first Midlands Economic Summit, an economics conference that brought together key stakeholders and businesses across the East and West Midlands.

Whilst the conference was focussed on the economics of the region, a number of points were pertinent to the residential development sector and its importance to investment in the region.

Inflation

The immediate focal point, for businesses both in the region and nationally, is the high rate of inflation, which is keeping interest rates high and is predicted to increase again, given the ‘stickiness’ of UK inflation.

Commentators suggested that whilst supply chain disruption seen in the wake of Covid and Brexit had eased, inflation remained high in the UK as a result of high employment and wage rises.

The ability to obtain a mortgage at attractive rates is therefore likely to remain a problem for the residential development sector for some time, particularly as existing fixed-rate mortgage deals gradually come to an end, and similar deals are unlikely to be available in the short-term.

Funding

The disorganisation of government and poor signposting when applying for funding of projects – such as major infrastructure – coupled with the inability of businesses to be able to pinpoint a decision maker and lack of pace when dealing with government bodies at all levels, were highlighted as major concerns.

This affects none more than those in the development and housebuilding sectors and the rhetoric during the summit suggested to me that this issue became more apparent the further away from London and the South East you were, which can only further damage the reality of delivering levelling up.

Notwithstanding these issues, Andy Street was keen to emphasise the positives, including the £500 million Deeper Devolution Deal to provide ‘genuinely’ affordable homes within the West Midlands.

Although it will be interesting to see the reality of the ‘genuinely affordable’ given interest rate hikes, it would appear to be a step in the right direction for the West Midlands, giving it more decision-making powers around housing development.

Closing the gap on London

One of the most powerful messages of the day was that all the ingredients remain there to deliver economic growth and investment across the region and incrementally close the gap between London and the South East.

The region has a host of top-class universities and strong advanced manufacturing and engineering industries, with exciting new technologies in bio-sciences being exported from the Midlands. It seemed clear that the private sector would need to lead on any economic growth drive of the region and developers have a huge part to play in placemaking to ensure the next generation of talent have good reason to come to or stay in the region, as well as be leaders in net zero projects and innovators in our historic land uses to create new, viable spaces for a range of business activities.

The importance of collaboration  

In the immediate future there are some real issues for a wide range of businesses, with no single or simple solution, and as a region, we should not downplay the challenges.

Yet when taking a longer-term view and focussing on the ingredients for business growth and investment, then there is much to take comfort from. However, we will need collaboration and drive across sectors if we are going to achieve anything.

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Joanna specialises in strategic land development projects. She has a wealth of experience in residential and mixed-use development schemes having advised on large-scale, long-term projects from inception to conclusion, with a particular emphasis on complex option agreements, promotion agreements, and collaboration agreements.

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Published: 16th June 2023
Area: Real Estate & Planning

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