Buyers Moving North in Search of Cheaper Properties
16 Oct 2018
North East Properties
The data by Hamptons International claim the average price of homes bought in the first six months was low at £174,580, fuelled by buyers' preference for cheaper homes in the North where the purchase prices are generally less but provided higher returns on investment.
Northern powerhouse attracts investors due to lower stamp duties and higher returns. In the first nine months, 61 per cent of London-based landlords invested in property in the North.
The current figures on UK property find buyers spent less by 30 per cent in the first six months compared to 2015. The decline in investment was pronounced in South East England and London. This movement from high-end regions to cheaper locations is considered risky by some market experts, who believe such new regions are highly vulnerable to downturns.
Further, the rental properties, which are generally expensive in London, are now unaffordable to young buyers; moreover, the increase in sales tax surcharge on the second buy introduced in 2016 increased the overall tax on properties.
Rents increased across all regions by an average of 1.6 per cent in the year to £980 a month as per Hampton's data to September y-o-y, and Wales had the strongest increase in average rent up to 3.9 per cent y-o-y.
Shifting the Commercial Sector
The northern cities such as Leeds and Manchester are growing through foreign investments and regeneration projects, especially in the technology sector. The commercial property rents grew 70 per cent in London from 2011 to 2015, which forced several commercial units to shift to northern regions, which offered low-cost office space and storage units.
An increase in the number of universities led to the growth in the number of newly graduated workers, where the job boards are now able to reach a new generation of qualified workers to offer career opportunities, especially in the engineering and manufacturing sectors.
Infrastructure growth and investments in transport, such as the HS2 project, the new high-speed rail network, and airports improved transportation. More than £100 billion have been invested in such projects in the North of the UK alone. Additionally, the developments at Manchester airport and Leeds train station will be able to offer transportation facilities comparable to London.
New broadband services for high-speed internet and tourism are other areas attracting investors. The growth in population and tech workers make Manchester close the digital skills gap with the capital. As the prices and rents grow, the gap between central London and northern cities may soon reduce.
An Implication of New Taxes
The new tax CGT (or the capital gain tax) will apply to property transactions from April. Still, there are many exemptions under the scheme, and the government is also expecting to introduce provisions requiring overseas buyers to provide information about the ownership.
The bill may be introduced by 2021, when the overseas entities may have to register to Company House in 18 months to hold a qualifying estate. Such changes may prevent anonymous ownership of properties in the country and increase transparency in property deals.
To know more about UK properties, click Hamilton International Estates (www.hamiltoninternationalestates.com)
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