Recently Boris Johnson said new regulations will make it easier to build better homes where people want to live, kick-starting the construction industry in the process. This was followed by Rishi Sunak’s Stamp Duty holiday which seeks to stimulate property sales.
As is often the case with announcements, it’s wise to resist the urge to get carried away until the finer details become clear but at first glance there are some interesting changes here.
One of these is reducing red tape to make it easier to repurpose redundant buildings and land.
Like many sectors, retail, at least in its physical sense, has been hit hard by Covid-19. But even before lockdown forced retailers to shut up shop, the high street struggled to respond to the economy and ease offered by online shopping and out of town retail parks.
This shift in the way we shop presents an increasing number of premises in attractive locations. As former retail units, a proportion of these will be in built up areas. This is not to say I see student flats and HMOs popping up on Oxford Street any time soon. Boarded up shops are more indicative of areas suffering from lower investment, so it would be fantastic to see city peripheries and smaller towns ‘levelled up’ as some of the biggest beneficiaries of the new regulations.
So, the buy-to-let market can play a significant part in breathing life back into fading areas, providing homes for customers needed to help independent shops, cafes and restaurants thrive. Research we have undertaken at Paragon suggests that landlords have the means to do this after developing fund reserves that will enable them to take full advantage of the Stamp Duty holidays announced by the chancellor.
But much has been made of the pandemic reducing our need and ability to congregate for work and leisure while increasing desire for properties benefitting from access to open spaces. Given this, would it be wise for landlords to invest in former retail units, that although not in big city centres, will have been purposely located in high footfall areas and so rarely have scope for gardens and private parking?
Maybe. Looking at the same issue from a different perspective, you could forecast a move to urban areas as people minimise public transport commutes.
It is too early to tell if the things that currently top tenant wish lists are a temporary reaction to recent restrictions or a longer-term shift in how we view our homes.
Even if these trends are the start of something more permanent and part of the ‘new normal’ that we’re still talking about, it clearly won’t apply to everyone. Not everyone has the desire or means to live in suburban or rural properties with big gardens.
While it’s worth keeping abreast of market trends, landlords should be reassured to know that demand for rented property remains. The Office for National Statistics forecasts 1.6m additional households in England by 2028. A significant number of these will be rented. If landlords can provide good quality homes that meet a diverse mix of needs, people will want to live in them.
The key here is ‘good quality’. Deregulation increases risk and it’s important to acknowledge that some poor conversions resulted from the planning changes on disused offices.
We must learn lessons from the past while addressing the issues of today. Sustainability is an obvious one, these planning reforms encouraging the development of brown belt land over green is indicative of environmental issues returning to the radar after being side-lined by coronavirus.
I’m confident we can do this; the sector has again shown resilience and the growing number of professional portfolio landlords are in this for the long term and are well placed to deliver.
At Paragon we’re well placed to support with in-house surveyors who enable us to carry out extra checks and balances needed to lend prudently and provide a higher quality of home.
Richard Rowntree, managing director of mortgages, Paragon
