Amidst rising interest rates and challenging legislation changes, many landlords will be seeking opportunities to maximise their profits on their buy to let portfolios. The government’s new investment zones may be exactly what landlords are looking for.
Following the recent survey conducted by the National Residential Landlords Association (NRLA) which revealed that landlords are now twice as likely to be selling than they are buying, it’s clear that even the most agile and resilient landlords are struggling in the current market. The report went on to reveal that a further 37% of landlords plan to reduce their portfolios in the coming year, the highest proportion ever recorded.
However, conversely, the report also highlighted that landlords saw a 67% increase in tenant demand, another all time high.
As such, many landlords and property investors will be looking for new ways to maximise on their current property portfolios and take advantage of this competitive tenant demand. In Jeremy Hunt’s Spring Budget back in March, it was announced new investment zones would receive £80 million of support over five years, encouraging new business, generating new jobs, and enticing more people to move to the areas.
In recent weeks, five of the twelve new investment zones have been announced. For property investors, these areas offer significant opportunities to provide rental housing and commercial business units for the areas. Below, we examine the areas that have been announced so far – it may be that you find the right area for your next property investment.
1. Cambridge
The most notable announcement so far is in Cambridge. Termed ‘Cambridge 2040, this new investment zone is set to receive a staggering 250,000 new homes in the area. The plans also include new rail lines, a potential tram and bus network, as well as other significant infrastructure projects.
A statement from Michael Gove’s office says “Rather than concreting over the countryside, the government will focus on prioritising building in inner-city areas where demand is highest and growth is being constrained. This includes a new urban quarter in Cambridge which will unlock the city’s full potential as a source of innovation and talent. Working with local leaders and communities in Cambridge, a new quarter will create new beautiful homes, supported by state-of-the-art facilities with cutting-edge laboratories and green spaces.”
2. East London ‘Docklands 2.0’
The Government has announced it intends to build up to 65,000 new homes in East London for a ‘Docklands 2.0’ project across multiple areas, including Thamesmead, Beckton, and Silvertown. As part of this project, the Department for Levelling Up, Housing and Communities intends to look at ways to create better transport connections from east to west in the capital. The goal is to encourage more local and private investment within the areas once these transport connections are set up.
3. London
The capital itself is set to be a major focus for the government, as for the first time the Affordable Homes Programme is to be directed at regeneration. The government is planning a “transformative reform” for London, changing how we level up communities across the UK. As part of this, London will receive £1 billion alone, with a focus on delivering on housing. For landlords who already own property in the capital, this is an exciting announcement that should help to drive up rental yields in the coming years following a slow return to pre-pandemic activity.
4. Leeds
In Leeds, the government plans to work to regenerate the city centre with a West Yorkshire mass transit system, opening up the area to more workers across it’s growing financial, legal, and digital sectors. This work is set to be accelerated by identifying housing growth sites surrounding the city, including the South Bank and Innovation Arc amongst other local areas. This could see a potential 20,000 new homes over the next decade become available in the area.
What’s clear in Leeds is the changes to drive new investment to the area are centred around housing and transport. In a vibrant student city, landlords may consider securing a new property investment here sooner rather than later as competition only grows.
5. Barrow-in-Furness
The final new investment zone announcement is in Barrow-in-Furness. The government plans to make a new ‘powerhouse of the North’ by extending the area beyond its current boundaries by building thousands of new homes. The North as a region continues to outperform the South when it comes to rental yields and, therefore, is a great area for landlords considering their next property investment.
The government’s continued focus on new housing is clear in each of the announced investment zones. Each area is undoubtedly going to attract significant demand from tenants, be that students or working professionals, and therefore it’s important for landlords to watch these areas closely for new property investment opportunities.
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