What does devolution mean for Manchester’s property market?

As Manchester, the engine of Osborne’s Northern Powerhouse, is receiving more media attention thanks to its Devolution, many local politicians, such as Sir Richard Leese, express concerns regarding the future of the city and what all this means for its housing situation.

What does devolution mean for Manchester’s property market?

In a recent article, the Financial Times stated that in the wake of the £1billion Devolution Deal, Manchester is seen as the best hope for uniting Britain once more by closing the economic divide between north and south. Since 2001 the city’s population has grown by more than 20%, consequently increasing the demand for suitable housing.

Whilst the UK’s private rented sector (PRS) as a whole has more than doubled in value over the past decade, the highest returns can be found in the regional markets outside of the country’s capital. Investors into Manchester property for instance, a market displaying strong occupier demand, good take up levels and low void periods, received average gross yields in Q4 2014 of 7.6%.As In the rest of the country a large proportion (1 in 4) of Mancunians nowadays are forced to rent as they are priced out of getting on the property ladder.

With increasing demand for rental accommodation comes a remarkable upsurge of foreign direct investment (FDI) in the Greater Manchester area. Having been voted UK’s ‘City of the Year’ at the Gazette/MIPIM Awards in October 2014, thanks to its successful major regeneration projects and its ability to attract an enormous amount of overseas investors, Manchester is now officially the most popular destination in the UK besides London for FDI. Next to the city’s £800million Airport City scheme with Beijing Construction Engineering Group, Manchester is setting new standards for property developers looking to invest in the city’s property market, through its newest housing project ‘Manchester Life’. In cooperation with Abu Dhabi United Group, the £1 billion ‘Manchester Life’ scheme aims at regenerating the city whilst attempting to set benchmarks for all housing developments to come.

Manchester is now officially the most popular destination in the UK besides London for FDI

In a recent interview, Sir Richard Leese, the leader of Manchester City Council, commented about the current endeavour: “We want to raise standards and as part and parcel of that we are looking within the planning requirements at setting tougher thresholds around quality, space and sustainability”. It is argued that in the case of no new guidelines for long-term focused building being established, Manchester runs the risk of seeing flawed, inadequate schemes being built which eventually would have to be taken down to make room for new, more efficient buildings.

According to Leese, similar regulations should be developed for landlords and estate agents who take advantage of the vulnerability of potential tenants through ‘revenge evictions’ and sky high agency fees. With the housing situation increasingly becoming a pressing issue, many political parties such as the Liberal Democrats or Labour, make it their mission to gain votes at the 2015 General Election by promising to introduce three-year tenancies, a national register of landlords along with a cap on ever-rising rent prices.

With everything that’s going on, like the General Election and the Devolution, Manchester is about to undergo what is perhaps its biggest ever change: a unification of Greater Manchester under one Mayor in 2017. With more control over spending powers, comes great responsibility. Sir Richard Leese states that it is crucial for the area to have a say about the required quality and standards of housing schemes as well as tighter controls over landlords, as the potential impacts of both defective projects and corrupt landlords would irrespectively be bad news for tenants and the city but for the industry as a whole.

Manchester Guide vertical - April 2019

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