The Regeneration Effect: How Local Redevelopment is Boosting Buy-to-Let Rental Returns
Dale Anderson
Managing Director | Global Buy to Let Specialist | 18 years' Experience | ￡2bn raised | Breaking Property News & Expert Advice
Local regeneration projects are a great way to boost the value of an area and the rental returns for Buy-to-Let investments. Redevelopment can improve infrastructure and make a place more attractive to renters, leading to increased demand and higher rental returns.
In this blog post, we’ll be exploring the regeneration effect and how it can benefit Buy-to-Let investors. We’ll look at examples of successful regeneration projects, their impacts on the local market, and the benefits to landlords.
What is regeneration?
Regeneration is an approach to creating a more economically vibrant, socially cohesive and environmentally sustainable future for towns, cities, and other places in the UK. It aims to level up local economies and communities by creating jobs, improving infrastructure, boosting skills and providing opportunities for local people.
The UK Government’s Levelling Up agenda is expected to provide investment for the rollout of Levelling Up Partnerships across England to boost regeneration. The programme will identify cross-government interventions to unblock obstacles to regeneration and support long-term growth.
To help fund this, the government has announced 12 new investment zones backed with ￡80m over five years, including tax incentives. Eight areas, all within MCAs, have been shortlisted by the government so far as holding investment zone potential: South Yorkshire, Tees Valley, West Midlands, West Yorkshire, East Midlands (proposed MCA), and North East (proposed MCA).
For property investors, one of the tax incentives includes?Stamp Duty Land Tax relief. However, the announcement still needs to include details on how (or when) it will apply and to whom it will apply.
The benefits of regeneration for landlords
With regeneration projects in the Northern regions, landlords can expect increased rental yields and potentially higher property values due to new job opportunities and improved infrastructure. Not to mention providing more job opportunities, causing a rise in wages and potential property buyers.
As the range of opportunities increases in key regeneration areas, the demand for housing will likely increase as people relocate for work (short-term or long-term), creating new demand from renters and homebuyers.
One of the appeals of investing in the North of England is the lower average purchase price of the property – especially when compared to London or the South of England.
Data released by the Office of National Statistics has shown that the North East has the lowest average house prices in the UK at ￡163,000, while London has the highest at ￡534,000. This presents an excellent opportunity for Buy-to-Let landlords to reduce the cost of their next property purchase. The lower price tag also means that less Stamp Duty is payable.
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Landlords should consider this an ideal time to invest in areas undergoing regeneration, taking advantage of the increasing rental demand and potential capital growth.
Case study: Manchester regeneration
Manchester is ideal for landlords looking to benefit from large-scale regeneration projects. The Greater Manchester Combined Authority is estimated to add?￡10.2 billion to the value of its property market, creating a wealth of opportunities for investors.
One example of successful regeneration is MediaCityUK, which has created thousands of jobs and built hundreds of homes. Average property values in Salford have seen a 47.6% increase between 2017 and 2021, making it a lucrative investment opportunity.
Regeneration projects such as this create employment opportunities and attract graduates who decide to stay in the city after their studies. Manchester has one of the highest graduate retention rates, with 51% remaining in the city for work after leaving university. This demonstrates that regeneration can transform a local economy and boost rental returns for landlords.
According to JLL, Greater Manchester’s economic growth is set to be higher than all the major UK cities over the next five years. This will further increase demand for rental properties, making now an ideal time to invest in Buy-to-Let.
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