What does levelling up mean for property professionals and investors?

Reece Mennie, CEO at UK property developer, HJ Collection, answers questions on what levelling up means for property professionals and investors.

Related topics:  Property
Reece Mennie | HJ Collection
4th March 2022
Question 901

In general terms, why should property investors and developers be interested in the new levelling up plans?

While it’s important not to take every aspect of the Government’s levelling up plans at face value – especially since several chunks seem to have been copied straight from Wikipedia – it’s still vital for property investors and developers to think about the opportunities of levelling up.

When you look at some of the key ‘levelling up missions’, as they’re called in the plan, from living standards to transport infrastructure to education, it’s clear that even partial success will impact property values and development opportunities in areas that have historically seen low property prices across the North and Midlands.

Of course, we shouldn’t just be thinking in terms of the specifics of February’s plans – we should also take these plans as part of a broader trend that recognises the need to encourage increased prosperity in the North and Midlands, which will (one way or another) present the property world with lucrative possibilities moving forward.

Obviously, those of us in the property-related world will be drawn towards the ‘housing’ aspect of levelling up – but are any of the other focus areas worth keeping an eye on?

The focus area that caught my attention was what the plan calls ‘pride in place’, which describes people’s satisfaction with their town centres and local cultures.

This is a little bit woolly – and achieving pride in place will obviously need a number of other improvements in areas like transport connectivity, employment, crime, housing, and the devolution goals set out in the paper.

Having said that, the plan’s emphasis on this kind of pride is a great recognition of how important town centres are for the growth and development of local economies – and any efforts to support that kind of growth will be of interest to property professionals, especially in the build-to-rent (BTR) space, who may find tenants interested in renting in previously overlooked towns and cities.

On the subject of overlooked regions, how did you react to the news that brownfield funding is being diverted towards sites in the North and Midlands?

This is something the industry is definitely going to take interest in.

In fact, when you look at the first mention of brownfield remediation, the plan is quick to point out that this will involve “working with the private sector.”

From a development standpoint, this shows that levelling up isn’t just something that’s happening to the property industry – it’s a process that we can play an active role in.

As someone who feels strongly about the current housing challenges faced by the UK, this appeal to private sector organisations to make a difference in these brownfield sites through conversions and rejuvenation is a step I welcome.

Wolverhampton and Sheffield are named in the levelling up papers as key areas of focus – do you think they’re good places to get the ball rolling?

Absolutely. We’ve recognised Sheffield’s potential for a long time, and it’s great to see the city named so often throughout the levelling up white paper.

In fact, I think the white paper’s phrasing is spot on when it comes to Sheffield and Wolverhampton: the upcoming projects are about “catalysing economic transformation”.

In other words: growth and development are already well underway, and the levelling up schemes are about maximising and accelerating the positive changes that are already happening.

In Sheffield, for example, the paper quite rightly points out that the city centre has already seen growth over the last ten years, and investors and developers will – according to the government – soon be able to unlock its regeneration potential and make the city even more appealing.

Whether you’re an investor, developer, or resident, this is absolutely worth supporting.

Wolverhampton and Sheffield are two examples among twenty towns and cities set to be regenerated by remediating brownfield land – what does regeneration mean for property developers and investors?

Regeneration is clearly the goal of levelling up – the word appears something like a hundred times across the white paper.

And, in many ways, regeneration is also the aspect of levelling up that’s most likely to get investors’ attention.

It goes without saying that property values can only rise in the face of regeneration – which, according to the white paper, involves making towns and cities more sustainable, attractive, and generally enhanced.

Combine this with the fact that property values are already rising in exactly the kind of areas targeted by levelling up – especially in the North East – and investors are left with a highly lucrative set of possibilities in areas that have sometimes flown under the property radar.

Housing quality stands out as a significant aspect of the levelling up project. How should developers prepare to meet new standards?

Housing quality is absolutely a big part of the levelling up agenda – and rightly so.

While more housing is needed urgently to address the housing crisis, it’s obviously counter-productive to prioritise speed at the expense of quality.

It’s difficult to say exactly how best to prepare for these new standards, though, purely because – as the paper says – there’s going to be a separate white paper published in the spring which will consult on a legally binding Decent Homes Standard for private rentals.

As such, developers and landlords should keep their ears to the ground and be ready and willing to react to this new legislation as and when the government releases details.

As the executive summary notes, levelling up is “a long-term endeavour”. How do you envisage its impact on the property landscape in 5 years’ time?

As I’ve mentioned, the whole white paper does need to be taken with a pinch of salt – levelling up has become a bit of a buzzword, and we have the additional challenge of not knowing how much of these plans will see the light of day.

With that being said, it wouldn’t surprise me at all to find that – at least to some extent – developers will have more opportunities at their disposal, while investors may well see already impressive Midlands and North England property value rises accelerated even further through regeneration and renewal across the various towns and cities mentioned in the white paper.

Whether these plans are successful remains to be seen, but even a fraction of the goals set out in the levelling up paper could have a decent impact on property over the next few years – which means now is the time to take a fresh look at neglected parts of the country with an eye for their long-term potential.

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