While the scrapping of the East Midlands to Leeds leg of HS2 was deemed a blow for businesses in the North East last year, there is still much to point to the region being abound with opportunity.

Even before the COP26 conference, the North East was starting to see the emergence of green energy industries that only look set to grow, creating jobs and attracting further investment in the region.

In part, this is owing to the region’s place atop of the list of industrial heartlands central to Boris Johnson’s blueprint for levelling up the country, while working towards the UK’s target of net zero emissions by 2050.

Announced in 2020, the Prime Minister says that his ‘green industrial revolution’ will result in £12bn of government investment to create and support up to 250,000 highly skilled green jobs, and encourage more than three times as much private sector investment by 2030.

One of the key areas of the ten-point plan is offshore wind, with four-fold increases in the amount we currently produce required if the target of powering every home by 2030 is to be met.

A new quay to service the offshore wind industry is to be built on the site of the former Redcar Steelworks on Teesside, representing one of the first examples of how the plan is set to transform the region.

The circa £200m project, announced at the end of October, was the first investment made by the government-sponsored UK Infrastructure Bank. Located in Leeds, the bank was created to finance projects that will help to combat climate change while stimulating regional economic growth, focusing on fields such as green energy, transport and waste.

Along with the Humber, Teesside forms part of the wider ‘East Coast Cluster’ (ECC), a project that aims to deliver infrastructure to decarbonise industry – the region contributing almost half of UK industrial carbon emissions – and establish a platform for economic growth.

After being designated ‘Track-1’ cluster status, the ECC is scheduled for deployment by midway through the decade with an average of 25,000 jobs forecasted to be created and supported per year between 2023 and 2050.

With so many extra jobs created, many of them highly skilled and specialist, it is likely that people will be drawn to the area and some of these will be reluctant to commit to purchasing in an unfamiliar location or be working on the type of temporary or fixed-term contracts commonly seen in the manufacturing sector. Here, the flexibility of rented accommodation is perfect and provides a further example of how renting can be a choice and not a necessity.

Alongside the burgeoning green industries, the tourism sector also offers opportunities for would-be buy-to-let (BTL) investors.

Although not as popular in terms of visitor numbers as celebrated holiday destinations such as the South West, the natural beauty of the coastline and moors, combined with the culture and heritage found in quaint villages and bustling towns, still attracts millions of tourists each year.

Compared to national averages, these holidaymakers are more likely to fall into the more affluent ‘AB’ social grade and also to opt for self-catering rented accommodation. With Visit Britain publishing these findings prior to the Covid-19 pandemic, it is likely that the market for holiday lets has since increased as a result of the staycation boom.

In addition, the North East is home to a number of well-regarded universities, both Durham and Newcastle are two of 24 institutions that make up the prestigious Russell Group. Universities in the region have forged partnerships with companies operating in important industries such as engineering, healthcare and financial services.

With organisations from the NHS to Nissan turning to the North East’s education system for skilled staff, the stable demand and attractive yields offered by the student BTL market will be found in the area for years to come.

It isn’t just the landlords letting to students who enjoy strong yields. Paragon research highlights how landlords in the North East regularly report above average returns and our recent private rented sector (PRS) Trends survey showed that landlords in the region generated average yields of 6.2% during the third quarter of 2021, the second highest in the country.

A key facet of this is the affordability of property relative to other parts of the country. Despite the latest Land Registry house price index highlighting that the North East has seen some of the highest annual price increases, at an average of £153,000, homes in the region continue to have the lowest purchase prices in England.

It would seem that this combination of affordable property and emerging markets hasn’t gone unnoticed by investors. Paragon research reveals that over the past three months, the North East market was the most dynamic across England and Wales, with landlords in the region more likely to have either bought or sold a property than those operating elsewhere.

This is supported by tax receipts from the stamp duty holiday when we look at purchase levels regionally and make comparisons with volumes recorded in 2015, the last full year before the BTL surcharge was introduced.

Comparing BTL purchases between July 2020 and the end of June 2021 with the same period a year earlier, increases of 52% and 49% were recorded in London and the South East, respectively.

While the 29% increase seen in the North East doesn’t look as impressive at first glance, when compared to 2015, the region actually outperformed its southern counterparts – purchase levels were 5.7% higher than the pre-surcharge period whereas London was down 30% and the South East 29%.

We know that portfolios tend to be made up of properties located within relatively close proximity to landlords’ homes, suggesting that these purchases were as a result of local investment.

With further Paragon research also highlighting how portfolios in the region are the smallest across England and Wales, in terms of total value, we see that there is room for private rented sector to grow in a way that will support the exciting and positive changes that appear to be underway.

Richard Rowntree, managing director, mortgages, Paragon Bank