Heathrow third runway backed by the government

Heathrow third runway backed by the government (Heathrow airport website)

The government has finally provided cabinet-level backing for the construction of a third runway at Heathrow Airport, which will have a range of potential implications for property investment in and around London. 

Transport secretary Chris Grayling confirmed in the House of Commons that ministers are ready to proceed with the £14 billion project - funded entirely by private money - with the scheduled completion date being 2026. He also announced a £2.6 billion fund to compensate local householders and provide ways of mitigating the extra noise. 

Mr Grayling urged MPs to back the new runway and it is likely that the government will get its way, despite lacking a Commons majority. 

While provision has been allowed for Conservative MPs living in constituencies affected by the decision to vote against the plan - including Zac Goldsmith, Justine Greening and foreign secretary Boris Johnson - Labour is likely to be split on the plan, with many in favour of an expansion that was proposed in its 2010 election manifesto but opposed by major figures such as shadow chancellor John McDonnell, in whose Hayes and Harlington constituency the airport lies.

The negatives are likely to focus on property near the airport, with some homes needing to be demolished and others falling in value because of the increased noise. Air pollution may be less of a problem, as Mr Grayling said the development will have to pass a key air quality test in order to go ahead.  

While this may affect residential property in parts of west London, the building of another runway may be a significant boost for overseas investment at a time when Brexit has been seen as a threat to London's prominence as a global city. 

The extra capacity will mean Heathrow can connect with more cities around the world, including emerging megacities in the east that do not presently have direct air links with London.

These effects may not be seen too soon as even the planned completion date eight years from now may be pushed back by last-ditch opposition such as judicial reviews, but with the expansion being designed to bring economic benefits to Britain, it is sure to have some knock-on effects on the property market.