Why UK property values will continue to rise
Those that want to buy in the best places to invest in property UK could benefit from policies that have been put in place to increase the supply of new homes in the UK housing market. In his Autumn Statement, Chancellor of the Exchequer Philip Hammond confirmed a package of help for the overstretched UK housing market. This included:
- A £2.3 billion housing infrastructure fund (with the objective of delivering 100,000 new homes)
- £1.4 billion provided for the delivery of 40,000 new housing starts by 2021
- A pilot scheme for a new round of right-to-buy
- Up to £2 billion for something called ‘accelerated construction’
Now, when you hear the term ‘accelerated construction’, as a property investor, you might think that faster development will help to close the gap between supply and demand. In turn, will reduce the pace of growth in residential property values and rental prices. However, in this case, that analysis is too broad.
In this article, I’ll explain what is meant by accelerated construction, and why it’s incredible news for property investment in the UK.
What is accelerated construction?
It was way back in October 2016 when the government first announced that it would put in place accelerated construction. Developers and housebuilders across the UK have long argued that the planning process creates a bottleneck that hinders investment and housebuilding. It’s complicated, long-winded, and expensive.
A lot of lands are protected and unavailable for housebuilding. Other prime development land suffers from local government procedures that slow down the whole process. It can be years before brownfield land is released. Research conducted by the Property Foundation indicated that eight out of ten applicants are dissatisfied with the amount of time it takes for planning decisions to be made.
As well as the capital being made available to promote accelerated construction, the new policy should help to slash times from concept to completion. Most importantly, it’s going to make it easier for local authorities to release brownfield land that was previously taboo – the locations where developers want to build and property investors want to buy. In towns and cities the length and breadth of the land, these locations are among the best places to invest in property in the UK.
How does accelerated construction work?
Part of the problem that developers have encountered include the cuts that local authorities have put in place that have limited their resources to investigate, assess, and free up public land for development. Instead of these responsibilities being placed solely on the local authority, accelerated construction produces an environment in which:
- public and private partnership speeds up house building on public land; and
- public land is provided with planning permission attached.
As an example, a local authority may now establish a housing growth zone that benefits from:
- Simplified planning permissions
- A more flexible approach to developer obligations
- Prioritisation of funding
There could be some bodies working on such an accelerated construction plan. These might include the local development organisation, the developers, the local authority, local growth funds, and housing associations (to assess affordable housing plans).
This means that:
- Developers have increased certainty of time and cost
- Funding is made available for infrastructure
- Locational demand from buyers and renters is better satisfied
It’s this last point that gives us a clue to just how good accelerated construction could be for property investors.
City centres are property investment goldmines
Town and city centres have gone through several reincarnations over the years. They’ve transformed from industrial cores to business centres, to retail hubs. To great parts, industry and retail have moved away from the centre. The latest evolution that we’re witnessing is a revolution of town and city centres as residential and business hubs. They’re becoming places where people live and work, relax and play. And huge money is being pumped into town-centre regeneration.
People are increasingly shunning the long commute to work. They want to live where it’s easy to travel to and from, and where recreation and social facilities are on the doorstep. Regenerated brownfield and public land are ideal: its near transport hubs, provides access to some of the best schools, and inhabitants benefit from being close to bars, restaurants, and a thriving social scene.
The problem for investors has been lack of supply
The real problem for investors has been the availability of investment opportunities in prime property locations. Or should I say lack of it? We simply can’t get enough property where people want to live. Accelerated construction should help free up the property needed to feed the demand from renters and buyers. Even given this, the demand for homes in the UK is way above the supply.
To come close to balancing supply and demand in the housing market, the UK would need to build between 250,000 and 300,000 new homes every year – that’s as much as 100,000 more than current numbers. Accelerated construction is a significant advantage for property investors. It’s going to give you greater access to the homes in which people want to live, but it’s not going to saturate the market with the new property.
Accelerated construction should offer you a better opportunity to buy residential property in the best places to invest in property UK while maintaining better-than-average capital gains and rental income growth.
How can you benefit from accelerated construction?
As these investment opportunities begin to materialise, we anticipate that there will be a lot of investment demand. The best property investment opportunities in these locations are usually the earliest investment opportunities. Off-plan property sales have the potential to produce some of the best property investment returns available – you only need to know when is the best time to buy off-plan property and then find the best place to invest.
Contact one of our team on +44 (0)207 923 6100 today and ask about our exclusive access to some of the best-accelerated construction developments in the market, and find out why investors who buy off-plan property through Gladfish return for more time and again.
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