What Brexit means for architects: Sector-by-sector breakdown

While the only thing all analysts agree on is that we are in for a long period of uncertainty, it is possible to make some predictions.

If the economy crashes and a deeper austerity budget is passed, projects will dry up, leading to fiercer competition among architects and even lower fees.

Many practices will put recruitment on hold while they wait to see what happens – PRP is just one of them. But Feilden Clegg Bradley Studios partner Keith Bradley said his practice was still hiring.

In the immediate future, UK citizens will retain the ability to work in the EU, and UK employers will be free to employ EU nationals.

During the two-year negotiation period, procurement thresholds will remain the same and UK architects will continue to have tariff-free access to the EU market.

Here is BD’s sector-by-sector guide based on what is known so far.

Commercial

This is where the immediate shocks will be felt. Clients are likely to put projects on hold while they wait to see if things settle down. This uncertainty ranges from house prices to potential loss of international funding.

John Morris, partner at global law firm Clyde & Co, predicted a downward readjustment of property values which could attract commercial developers who were previously wary of a market that was artificially high. “But much depends on the demand for completed developments. If large corporates remain in the UK, the adjustment could be positive but that will be uncertain for several months,” he said.

Housing

Housebuilders took a kicking on the stock exchange today but traders’ jitters can’t change the basic fact that demand for housing far outstrips supply, at least in the south-east.

Brendan Kilpatrick, senior partner at housing specialist PRP, said that, plus the fact that the sector had been largely unmoved by the fluctuating polls, gave “some grounds for optimism”.

Marginal land deals and luxury resi are the biggest risks, he said, with foreign investment expected to cool. Any suppressing of values will probably filter down to the top end of what practices like PRP do, he said predicting “one or two” jobs would halt.

Higher education

This has been a rich source of work for architects in recent years. No immediate effect is likely but in the medium and long term the loss of European funding and concerns over the status of European students will have a significant impact.

Schools – state

This will depend on the new funding and procurement regimes that emerge in the months ahead. But with renewed austerity likely, already-tight public investment will be under even more pressure. The picture will vary around the country as local authorities with expanding populations will have to find a way to make places available. Perversely, they are losing the mechanism to do this as the government pushes ahead with the conversion of all schools to academies.

Schools – independent

Private schools are reliant on fundraising and their own investments. Many donations come from overseas parents – a fair proportion from outside the EU – so it is unclear how that particular income stream will be affected. While interest rates were low, it has been easy for private schools to borrow from banks that see them as a safe bet. If Bank of England governor Mark Carney puts up rates to protect sterling, that could change.

Infrastructure

Doubts surround the future of HS2 because leading politicians in the Brexit campaign are either lukewarm or actively oppose it. If Britain falls into recession, public finances will be under renewed pressure. Meanwhile, if Boris Johnson becomes prime minister all bets will be off over which airport will be anointed Britain’s aviation hub. Johnson’s favoured Thames Estuary solution – designed by Foster & Partners – will gain fresh momentum.

Small-scale domestic projects

Domestic extensions are a pretty good litmus test of what’s going on at large, said Joanna Day, partner at Langstaff Day.

“Recently, in London, people really are improving rather than moving, contractors are in demand and we are often dealing with people from eastern Europe, many of whom have built up excellent reputations over a few years here.

“We are worried, therefore, that the uncertainty of Brexit will affect both the client side, who may decide that their income and stability is threatened and decide not to embark on or proceed with their projects, and the contracting supply chain who must be feeling uncertain and – in some cases – unwelcome.”

Cultural and community projects

If an emergency austerity budget is enacted the resulting cuts will have a huge effect on smaller-scale arts and community projects. The most prestigious institutions might still be able to attract donations from wealthy global philanthropists.

Sustainability

Since the zero carbon home target for 2016 was scrapped in the Housing & Planning Bill in May, the main regulation driving the zero carbon agenda was the EU’s Energy Performance of Buildings Directive (EPBD), which requires all new buildings in the EU to be “nearly zero energy” by 31 December 2020.

Energy minister Andrea Leadsom – a high-profile leave campaigner – defended the government’s decision to scrap zero-carbon homes last month, citing the EU directive.

While the UK will no longer be bound by the EU’s targets for “nearly zero energy” buildings by 2021, the fact Leadsom chose to mention those targets could mean the UK keeps the regulation as it begins the very lengthy process of deciding which EU regulation it will keep, amend or ditch.

European research funding is a different matter. This will tail off quite fast, hitting architects’ environmental research divisions hard.

Labour

Now we have a Brexit, it is expected that Britain will leave the single market, which will end freedom of movement for workers across the European Union. In the UK, government figures show nearly 12% of the construction industry’s 2.1 million workers come from abroad – mainly from the EU. According to the CIOB, the industry will need to find an additional 224,000 new recruits by 2019 to meet the overall pipeline of work.

It is important to note that nothing will change in the short term, but all indications suggest the skills shortage will now get worse. That will push up wages. A recent survey showed wages for bricklayers working in London have hit £25 an hour due to the current skills shortage, and before the referendum analysts predicted wages would rise further if Britain voted to leave.

Materials

The value of the pound has fallen dramatically, at one stage hitting $1.33, a fall of more than 10% and a low not seen since 1985. Experts predict it could fall further in the coming days and weeks. For an industry which imports 64% of its materials from the EU, a lot of projects will see a significant rise in material costs in addition to upward pressure on workers’ wages.

Investment

Most analysts are predicting that investment will drop markedly, especially in the commercial construction sector. There was talk of a “remain dividend” if Britain voted to remain, whereby investors would give the green light to a flood of commercial projects which were previously on hold. But with such uncertainty now surrounding the economy, European investors are likely to be put off.

However some experts have pointed out that a Brexit could now provide a significant opportunity for inward investment from the US and Asia, with the fall in sterling making investment in the commercial and residential sectors more attractive for non-EU buyers.