The boss of Arada UK has put forward his proposals to get "spades in the ground" to boost the UK’s property-reliant economy.
Jonathan Seal, chief executive of the Sharjah-based developer's UK arm, has made three suggestions he believes would to speed up housebuilding and restart the property market: ease lending to first-time buyers, update stamp duty and simplify planning.
He put forward his ideas during a recent visit to Downing Street to meet government advisers and speak about the company’s successes in its first year operating in London.
Arada acquired mixed-use developer Regal London last September, taking a 75 per cent share in the company.
Almost immediately after, it acquired an 80 per cent stake in a landmark waterfront regeneration project at Thameside West in the east of the city. In June it unveiled its first residential project, 100 Avenue Road in Swiss Cottage, while its other projects include building student accommodation next to the Roundhouse music venue in Camden and plans to transform the former Salvation Army headquarters in Elephant & Castle into a new urban quarter.
Its rapid progress has not been matched by much of the UK’s property industry.
Igniting a building boom has been a goal for successive prime ministers, but with about 20 housing ministers in the past 20 years, seeing a vision through to completion before a reshuffle could not be done.
There may be a new face in Number 10, but Prime Minister Andy Burnham faces the same economic problems as his predecessors.
Successive governments have promised to build more houses across the UK, but have fallen short of their targets.
Keir Starmer pledged to build 1.5 million new homes before the end of this parliament, while Mr Burnham wants the “biggest council house-building programme” since the Second World War. Their goals are twofold: to create much-needed homes but also to generate economic output with the associated job creation, manufacturing and tax revenue.
The property market would currently be described as sluggish at best, with prime London prices down 20 per cent compared with their 2014 peak.
The much-delayed autumn budget put a brake on sales, before a mansion tax on homes worth more than £2 million ($2.6 million), was introduced, threatening to slow deals further. The Iran war has put a halt to mortgage rate cuts.
Average sale prices fell by 7.9 per cent in July compared with a year earlier and 5.7 per cent lower than the 2017-2019 pre-pandemic levels, according to independent property analysts, LonRes.
There were 11.5 per cent fewer sales transactions in July than a year earlier.
There has been speculation that Mr Burnham is planning to overhaul the property tax system for the next budget in the autumn. He has been a long-term supporter of an annual property tax, but has denied he intends to abandon stamp duty or council tax on a mass scale.
Change needed
Mr Seal, who was the managing director of Regal London before becoming chief executive of Arada UK, believes changes to the tax system are needed.
He told The National that if the government really wanted to get things moving, then changes to stamp duty were the most straightforward solution. The levy, which is paid by the buyer, starts at 2 per cent for homes selling for between £125,001 and £250,000, then rises to 5 per cent from £250,001 to £925,000, 10 per cent from £925,001 to £1.5 million, and 12 per cent above £1.5 million.
“I think the easiest thing to do, which doesn't cost the revenue anything at all, is to move stamp duty to the seller, not the buyer,” Mr Seal said. “So you don't lose the tax.”
The knock-on effect would be that it becomes easier for first-time buyers to get on the property ladder.
To really encourage movement, he says there is a need to “squeeze the banks” to encourage lending to first-time buyers.
Several banks were bailed out by the government during the 2008 economic crisis, but have now returned to private ownership.
“They're not lending to those first-time buyers, so we've got an affordability issue at the lower level,” Mr Seal said.
Finally, he wants to see the planning process made more efficient, saying the Greater London Authority should work alongside local authorities more effectively, rather than having applications moved between the two year after year.
“We see politics meddling in planning,” Mr Seal said. “That's three years before you put a spade in the ground. So if the government is serious, can they improve the planning process?”
He said the process would still take months and months even after emergency powers were brought in to speed up the process. “There's no emergency about that,” Mr Seal said.
“Ignoring all the politics, I think that there are some really easy structural wins you could do to get the market moving."
Challenges
Speaking to The National at the Arada UK construction site next to the Roundhouse, Mr Seal – who before property developing worked as a lawyer, investment banker and in private equity – is upbeat about the opportunities in London for Arada, despite a sluggish economy struggling with challenges such as the Iran war, rising inflation and dealing with US President Donald Trump’s tariffs.
“I don't bring that to the door and that doesn't occupy our brain cells because you can't control any of it,” he said. “I can't control the macro, but I can control the micro.
“What I can control is delivering the best quality schemes on time, on budget, and looking to build and grow our presence.”
Mr Seal said Regal, which had been operating and growing since 1998, had been looking for a strategic real estate partner to allow the business to move to the next stage, while Arada had ambitions to expand its presence into the UK.
Regal could not have taken on a project like Thameside West – the capital’s longest stretch of undeveloped riverfront, with the potential to deliver more than 5,000 homes – for example, without Arada’s scale.
“Arada are the regeneration specialists,” he said, pointing to the megaprojects of Aljada and Masaar in Sharjah.
What had particularly made the company work in London was the diverse nature of its projects, from student accommodation to luxury residences or major regeneration projects.
No two sites are the same, and the company can manoeuvre as required.
“We're not a house builder in a traditional sense, we're not a volumetric builder, that's not in our DNA," Mr Seal said. “We are about finding development opportunities and delivering them for the life cycle of an asset.”
He said operating across London’s boroughs means there are different requirements for each development, with their own planning departments to take into account.
“The skill set is trying to understand what you can deliver on that site because everything is different in every borough.”
As much as governments say housing is important to them, they are not truly in control of the industry.
“You hear successive governments talking about housing problems, trying to achieve targets," Mr Seal said. "It's all noise, because our focus is at local level.
“Planning is taking place at the local authority level and through the GLA.”
Opportunity knocks
The very challenges that make it difficult to boost the economy are also the factors that create opportunities for Arada: undersupply of homes, and the number of rival businesses that have pulled out of London in recent years.
Mr Seal says success requires patience and a long-term view to projects.
Flexibility is also key, and Arada can tack between joint ventures with current landowners such as charities, who are asset-rich but without the knowledge of how to unlock their site’s potential, or they can buy land outright if they can find the right value and start from the ground up.
He said the company has a goal of doubling its pipeline, which currently stands at 17,750 homes, within the next few years and will grow by branching out from just focusing on luxury mansions. It is delivering about 4,000 student rooms, which is 25 per cent of that market in London.
“I have a saying: ‘We deliver any bed – a for sale bed, a rental bed, a hotel bed, a co-living bed, an affordable bed'. It's quite a lot of beds and London needs all of those."
As a born-and-bred Londoner, Mr Seal sees no current reason to expand beyond the city, where local knowledge is vital.
“I was literally born up the road from here, and I'm a very proud Londoner. I think it's still one of the greatest cities.
“We know this city like the back of our hands and so intuitively, we have the right feel around what we should be buying, what we shouldn't be. And we know our market, where we should be playing and where the pricing works.”
London’s struggles could actually play into Arada’s hands.
“Right now we’re at a very, very low point in the market, and a pretty good time to come into London because of the macroeconomic backdrop. Now's a pretty good time to be buying land, and develop and grow."
And if there’s one area he thinks is ripe to focus on?
“It’s in the east. You’ve got City airport, cable cars, light rail, train stations. We build new housing, new connectivity, new amenities, and drive new communities into that part of London.”
