The most underrated sector in the UK’s property market


There is nothing more calculated to whet the appetite of any City of London professional than to stumble on an underrated asset. Years ago, when I was a business journalist, my favourite role was to be a human truffle hound on the business desk, sniffing out value in businesses, whose only sin was being well-run but unexciting.

So, if I said to you that hiding in plain sight, there is a £60bn sector driven by London and the south east, which is routinely ignored by policy makers and rarely accorded parity of esteem by the business community, what would you say?  Worth pushing the slide rule over?

The sector is the UK civil society. Before you yawn and stop reading, just consider that the trustees of Pro Bono Economics, the London think tank setting the £60bn value, include none other than Bank of England Chief Economist Andy Haldane.

With reportedly as much as a million square feet of empty office space in our region, could London’s civil society be a second look as a tenant class?

Last November, I was invited to join the technical panel of Pro Bono Economics’ new Commission on Civil Society, funded by the family charitable trust of leading hedge fund manager Andrew Law.

The Commission’s ambition is nothing less than a revaluation of civil society by policy makers and every part of the economy. Brilliant timing given how ruthlessly the pandemic has exposed the shortcomings of business as usual, not least in our wonderful but now deserted City.

Civil Society – of which the voluntary sector, my sector, is part – is vitally important for business as the vital compost which enriches us all and makes cities thrive and doing business possible and fun.

My organisation the Ethical Property Foundation is the UK’s only dedicated property advice charity serving the UK voluntary and community sector which has assets of 11bn+ and employs, even today, 900,000+ people (NCVO Civil Society Almanac 2020).

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Property owners in the Square Mile shouldn’t overlook the UK Civil Society when trying to fill the many vacant offices.

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Yet the estate our sector owns and occupies is too often ignored by policy makers funders and even boards of charity trustees themselves and so property remains the number 1 reason, due to poor decision making – why charities need to close or cut services. Time perhaps for enlightened landlords, property professionals and investors to wake up to the scope and needs of this sector.

Charities like every other small business, are looking to the future of work, but they will still need offices even if Covid has taught us that the 5-day office week is history. Our London Charity Property Matters Survey 2020 funded by City Bridge Trust and Russell-Cooke – came out just before Christmas and showed just how Covid is exposing existing weaknesses and is fast-tracking new trends.

The big problem for London not-for-profits? Cost – with 51% suffering unforeseen costs of maintenance/repairs with empty buildings while 45% cannot find suitable, affordable premises.

Costs of compliance with H&S, environmental standards are hurting 36%, while over a quarter (27%) are in dispute with their landlords as Covid continues to bite into reserves and fundraising.  The issue of poor-quality buildings affecting staff retention is also an issue for 22%.

Half of the sample 50% believe property is a significant risk for their charity, while 42% identify property as a barrier to achievement of their charity’s objectives. Up on previous surveys due to Covid.  On the positive side,
over 80% of London charities surveyed say they have a comprehensive annual budget plan for property and around 60% are aligning their property needs to business planning and made risk assessments relating to property management. On the negative side, however:

  • 61% do not regularly report to trustees on property matters.
  • 60% have no designated capital fund for property maintenance and repairs.
  • 46% have no suitably skilled individual with responsibility for property.
  • 42% fail to make regular assessments of property service providers.

This is a snapshot of a fast-changing sector which is on the cusp of big change. We are nippy, innovative and we deliver but we need to count, and we need investment. And we need the private sector to start taking us seriously. Because if our organisations can survive Covid, what fantastic strengths we can bring to London plc. The question you need to answer is: are you in the market for the long term?

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