This long-awaited White Paper, which covers how the Government intends to level up the UK’s economic and well-being, has now been published. It’s a 332-page document that sets out ambitious targets for 2030, which cover a vast range of plans including:
- How areas outside of London and the South will be supported and funded into the future
- Enhancing local leadership and decision making
- Spreading national government to areas outside of London and the South
- Confirmation of new initiatives to improve delivery of privately rented homes for tenants
- How the Government will support changes to buying and selling property
But how will the plans to level up the country, change the buying and selling process and all the other various new policies affect landlords now and into the future?
Levelling up areas outside of London and the South East
The majority of the document is concerned with explaining the geographical disparities between different areas across the UK and then outlining the plans to address them.
For example, weekly pay in London is vastly superior to the North East, which underperforms by £41 per week against the UK average. At a smaller geographical level, Ards and North Down in Belfast is the worst performing area while, unsurprisingly, Westminster overperforms the UK national average by £267 per week.
However, further analysis of peoples’ incomes after housing costs reveals a slightly different story. London then drops away as the best performer, leaving those in the South East and East of England the best off, while people in Yorkshire and Humber and the North East have the least money left to spend on other bills and living.
The Government’s plans to try and fix some of these disparities are extensive and all their proposals are actually aimed at improving life for everyone, so that should have a positive knock-on effect on the housing market as well.
One of the key objectives of 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 they’re successful, this is good news for landlords, as better pay and more employment typically results in tenants being able to afford annual increases in rents in line with inflation. That means landlords can maintain both their own income and any increased costs of being a landlord.
Then there are plans to ensure “local public transport connectivity across the country will be significantly closer to the standards of London, with improved services, simpler fares and integrated ticketing.” This improvement and expansion of commuting routes could open up areas that are currently not viable to live in for people who need to travel into a town or city for work. This could improve demand for existing lets and open up new demand for lets in areas that were previously poorly connected.
Finally, there will be a plethora of investment in different regions, with 20 cities and towns highlighted for extra support. So, if you’re looking to invest in property, it’s well worth understanding what’s happening and where. And if you already have a property in one of these areas, then do find out how the changes may support your current investment.
The 20 towns that will receive specific investment include Sheffield and Wolverhampton, with the improvements expected to make areas like these ‘more attractive places to live, work and spend time’.
Sheffield has already been granted £37m to improve the Castlegate gateway to the city and other regeneration projects. Infrastructure-wise, there are plans to increase the speed of travel to and from Manchester and bring London to within a 1.5 hour commute. And in Wolverhampton, there are plans to reinvigorate the city centre, with a £20m Levelling Up Fund allocated to the creation of a City Learning Quarter. Wolverhampton will also be the new home for the government’s DLUHC headquarters.
New ‘Innovation Accelerators’ will be created, which the Government hopes will deliver our own equivalent to ‘Silicon Valley’ - initially in Greater Manchester, the West Midlands and the Glasgow City Region. Other planned projects include a ‘gigafactory’ on the site of the former Blyth Power Station and a new wind turbine blade manufacturing centre on the former Redcar steelworks site in Teesside.
Spreading national government to areas outside of London and the South
New plans have been committed for various government departments to open in locations across England, with the aim of creating thousands of new government roles by 2030:
- The Department for Business, Energy & Industrial Strategy (BEIS) will open in areas including Salford, Birmingham, Cardiff and Belfast
- The Department for Environment Food & Rural Affairs (DEFRA) will have offices in York and Tyneside
- The Department for Work and Pensions (DWP) will be established in Leeds, Burnley, Runcorn and Reading
- HMRC will create more jobs for areas such as Nottingham and Liverpool.
If this investment and new way of working at a local level succeeds, it could be great news for landlords and property investors, as we know that when an area improves economically, rents and property prices typically rise too.
There will also be investment in 8 new Free Ports to help promote regeneration in these locations. 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.
The Free Ports announced in the White Paper are:
1. East Midlands Airport
2. Felixstowe & Harwich, including the Port of Felixstowe and Harwich International Port
3. Humber, including parts of Port of Immingham
4. Liverpool City Region, including the Port of Liverpool
5. Plymouth & South Devon, including the Port of Plymouth
6. Solent, including the ports of Southampton, Portsmouth and Portsmouth International Port
7. Thames, including the ports at London Gateway and Tilbury
8. Teesside, including Teesside International Airport, the Port of Middlesbrough and the Port of Hartlepool.
And the Government aims to establish one in each of Scotland, Wales, and Northern Ireland as soon as possible.
To find out whether an area you’re looking to invest in or where you already own property is going to receive investment – and how it’s going to be deployed – take a look at p.41 and p.131 of the White Paper.
What are the changes to the PRS that will affect landlords?
The Government has promised that by 2030 “renters will have a secure path to ownership” and they have stated they want to turn ‘generation rent’ into ‘generation buy’. One of the ways they intend to do this is to give more support for affordable homes to areas outside London and the South East, with the aim of delivering 300,000 new homes per year in England by the mid-2020s.
Currently, their policy to grow home ownership against the private rented sector has worked. In 2021, we had the highest number of first-time buyers for two decades, while private rented sector supply has remained the same for the last few years.
Although it would be good to improve home ownership and get more first-time buyers on the ladder, doing this at the expense of renters is unlikely to work. Currently we’re seeing stock levels in the rental market at an all-time low, meaning competition between tenants is forcing rents upwards, with Zoopla reporting the highest rent rises in 13 years.
The NRLA has just released a report from Capital Economics that suggests if social and home ownership continue on their current stock trajectory, we’ll need nearly 230,000 more new private rented homes every year. Without this, people that aren’t in a position to buy and who all need a roof over their head too - such as those on benefits, students and people working temporarily in an area – will find it increasingly difficult to secure accommodation.
What about the White Paper specifically on Rental Reform?
We are still waiting for another, more specific White Paper on reform of the rental sector.
Meanwhile, in addition to confirming that the Government still aims to scrap Section 21 and introduce a redress scheme for landlords, this Levelling Up White Paper also mentioned it will create a ‘decent homes standard’ for the private rented sector. However, given that we already have a huge amount of legislation in the PRS that covers the condition of rented properties - including the Housing Health and Safety Rating System; the Homes (Fitness for Human Habitation) Act; a minimum EPC rating of ‘E’; gas, fire and electrical safety laws and various licensing schemes – it’s difficult to imagine what further ‘standard’ could be introduced to improve the safety of properties for tenants.
What’s perhaps needed is more robust enforcement action against landlords and agents who break the law by failing to comply with the extensive minimum standards already in place. This will require proper funding for Local Authorities, who are largely responsible for enforcement of these regulations.
How is the Government planning to improve home buying and selling?
Everyone knows that buying and selling a home, particularly during a pandemic, can be quite stressful and costly. The Government has already stated that they want to improve this process, which can see around a third of sales falling through after an offer has been accepted, so they’re working closely with the home moving industry to help ensure crucial information is made available to buyers before an offer is put forward.
The Government intends that this information - which includes things like tenure type, lease length, any service charges and ground rent – will be available digitally, from ‘trusted and authenticated sources’ and they state in the White Paper that they’re committed to legislating if necessary.
Anything that saves time and money when buying and selling a home would make a huge difference to landlords and investors, so this can only be seen as a welcome move by the Government.
Whatever your plans are for your Buy to Let and property investment, it’s worth finding out if there will be additional investment in your area and making sure you keep up to date with any changes to the rental or buying and selling process.
If you need help working out whether to invest or to move your Buy to Let strategy forward, do get in touch with one of your local Reeds Rains letting agents who will be happy to help.