At the start of February, the Government published its long-awaited ‘Levelling Up’ White Paper. This is a 332-page document that sets out how the Government plans to level up the UK’s economic and well-being between now and 2030.
It sets some ambitious targets and outlines a huge range of plans, including:
Supporting and funding areas outside London and the South into the future
Spreading national government to areas outside of London and the South
And for the property market specifically:
- New initiatives to help deliver private rented homes for tenants
- Making changes to improve the buying and selling process
Most of the White Paper is dedicated to explaining the geographical disparities between different areas across the UK and then outlining specific plans to address them.
One of the biggest issues highlighted is income. It probably comes as no surprise to learn that average weekly income in London’s Westminster is £267 higher than the UK average, while in the North East of England it’s £41 lower.
But when you take away housing costs, it’s a slightly different story. Those in the South East and East of England are the best off – not Londoners – while people in Yorkshire and Humber and the North East have the least money left over.
So a key objective within the levelling up plan is that by 2030: “pay, employment and productivity will have risen in every area of the UK, with each containing a globally competitive city, and the gap between the top performing and other areas closing.”
If the Government succeeds, that’s good news for landlords because better pay and more employment usually means tenants will be able to afford annual rent increases in line with inflation. That allows landlords to maintain their own income and helps them afford any increasing costs of being a landlord.
But what exactly is the Government proposing to fix geographical disparities and, importantly, how are their plans likely to affect landlords now and into the future?
The White Paper states: “local public transport connectivity across the country will be significantly closer to the standards of London, with improved services, simpler fares and integrated ticketing.”
Improving and expanding commuting routes will make many more areas viable locations for commuters to live in. This could improve demand for existing lets and open up new demand for rental properties in areas that are currently poorly connected.
Government departments to open new offices across England
The Government has committed to creating thousands of new government roles through opening various government departments in locations across England, including:
- In Salford, Birmingham, Cardiff and Belfast – The Department for Business, Energy & Industrial Strategy (BEIS)
- In Leeds, Burnley, Runcorn and Reading – The Department for Work and Pensions (DWP)
- In York and Tyneside – The Department for Environment Food & Rural Affairs (DEFRA)
- HMRC will also create more jobs, including in Nottingham and Liverpool
20 towns and cities highlighted for extra support
The Government has selected 20 towns and cities in northern parts of the UK to receive specific investment for improvements. The aim is that it will make these areas ‘more attractive places to live, work and spend time’.
Just some of the plans:
- Sheffield has already been granted £37m to improve the Castlegate gateway to the city and other regeneration projects
- There are plans to increase the speed of travel to and from Manchester and bring London to within a 1.5 hour commute
- Wolverhampton city centre will be reinvigorated, with a £20m Levelling Up Fund allocated to the creation of a City Learning Quarter. The city will also be the new home for the government’s DLUHC headquarters
- New ‘Innovation Accelerators’ will be created, initially in Greater Manchester, the West Midlands and the Glasgow City Region. The Government hopes these will deliver a UK equivalent to ‘Silicon Valley’
- A ‘gigafactory’ will be established on the site of the former Blyth Power Station
- A new wind turbine blade manufacturing centre will be built on the former Redcar steelworks site in Teesside.
8 new Free Ports
Free Ports are special areas centered around “one or more air, rail, or seaport, but can extend up to 45km beyond the port(s)”, where different economic regulations apply – including special tax incentives for eligible businesses located there.
It’s hoped that new investment will help promote regeneration in the 8 new Free Ports announced in the White Paper:
- East Midlands Airport
- Felixstowe & Harwich, including the Port of Felixstowe and Harwich International Port
- Humber, including parts of Port of Immingham
- Liverpool City Region, including the Port of Liverpool
- Plymouth & South Devon, including the Port of Plymouth
- Solent, including the ports of Southampton, Portsmouth and Portsmouth International Port
- Thames, including the ports at London Gateway and Tilbury
- Teesside, including Teesside International Airport, the Port of Middlesbrough and the Port of Hartlepool.
The Government also aims to establish one in each of Scotland, Wales, and Northern Ireland as soon as possible.
If all this investment and new way of government working at a local level succeeds, it could be great news for landlords and property investors. We know that when an area improves economically, rents and property prices typically rise too.
So, if you already have a property in one of the areas mentioned, or you’re thinking of investing in Buy to Let, it’s well worth understanding what’s happening and where.
To find out whether an area you’re looking to invest in or where you already own property is going to receive investment – and details on how the money will be spent – take a look at p.41 and p.131 of the White Paper.
Home ownership and the Private Rented Sector (PRS) – what are the Government’s plans?
The Government wants to turn ‘generation rent’ into ‘generation buy’ and they’ve promised that by 2030 “renters will have a secure path to ownership”. They’ve pledged more support for affordable homes in areas outside London and the South East and still intend to deliver 300,000 new homes every year in England by the mid-2020s.
As it stands currently, their policy of growing home ownership against the private rented sector has worked. While the number of lets in the private rented sector has remained the same for the last few years, 2021 saw the highest number of first-time buyers for two decades.
Of course, getting more first-time buyers on the ladder is a good idea. However, doing it at the expense of renters isn’t a solution that’s likely to work. Rental stock is at an all-time low right now, and when there’s a shortage of supply versus demand from tenants, competition to secure decent accommodation simply forces rents upwards. Indeed, Zoopla is reporting the highest rent rises for 13 years!
And what will happen if this current trend continues? The NRLA has just released a report from Capital Economics, suggesting that if social and home ownership keep going on their current trajectory, we’ll need nearly 230,000 more new private rented homes every year.
It’s important for the Government to remember that there are plenty of people who aren’t in a position to buy – such as those on benefits, students and people working temporarily in an area. These people all need a roof over their head and if there aren’t enough rental properties available, they’ll find it increasingly difficult to be able to afford accommodation.
The Rental Reform White Paper is still to be published
Although we’re still waiting for the White Paper that’s going to give detailed proposals for Rental Reform, this Levelling Up document has confirmed:
- The intention is still to scrap Section 21
- A redress scheme for landlords will be introduced
- A ‘decent homes standard’ will be established for the PRS
The last point is a new proposal and, in our opinion, it’s hard to imagine what more could be done to improve the standard of rented properties for tenants. Landlords already have to abide by:
- The Housing Health and Safety Rating System
- The Homes (Fitness for Human Habitation) Act
- A minimum EPC rating of ‘E’
- Gas safety, fire safety and electrical safety laws
- Licensing schemes (for HMOs as well as some other rented properties in England)
Instead of introducing even more legislation, it might be better to focus on more robust enforcement action against landlords and agents who break the rules already in place. Obviously, proper funding for this would need to be provided for Local Authorities, as they’re largely responsible for enforcement.
While we wait for the White Paper specifically focusing on reform of the rental sector, you can catch up with the proposals to date with our most recent article on the Renters’ Reform Bill.
What are the plans to improve the buying and selling process?
We’re all aware that buying and selling a home – particularly during a pandemic – can be quite stressful and costly. And that’s not helped by the fact that around a third of sales can fall through after an offer has been accepted.
So, in an effort to improve the process, the Government is working closely with the home moving industry to help ensure crucial information is available to buyers before they make an offer.
This includes things like tenure type, lease length, any service charges and ground rent. The Government intends to make sure it’s available digitally, from ‘trusted and authenticated sources’, and they’ve said they’re committed to legislating on it, if necessary.
Anything that saves time and money when buying and selling a home would make a huge difference to landlords and investors, so we certainly welcome this move by the Government.
With the government looking to invest in areas across the UK, if you are considering investing in Buy to Let or want to know how to expand your existing portfolio, do feel free to talk to your local Your Move branch who would be happy to chat through your options.