NORTHERN PROPERTY GUIDE 2017/2018
NORTHERN PROPERTY GUIDE - 2017/18
FOREWORD The UK buy-to-let market is booming. The Private Rented Sector (PRS) in the UK is now worth an eye watering £1.29tr plus, a figure only expected to increase further as renting becomes a serious longterm alternative to buying for the next generation. With the number of houses in the PRS expected to grow 24% by 2021, buy-to-let property investment looks more and
more attractive to investors looking to put their money into bricks and mortar. However one key aspect to successful property investment is strategy – namely where to invest. It’s vital to invest in an area where tenant demand and average rental yields are high and house price growth is on the rise. By doing this you can ensure that your property remains tenanted and continues to generate a good return whilst overall capital
Contents
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Why the North?
Comparison with London
Northern cities like Manchester and Leeds have been growing in popularity in recent years, boosted by significant infrastructural investment and rising tenant demand.
London was once seen as the place to live and work, but now all that is changing because of the capital’s growing unaffordability crisis.
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Regional hotspots
Knight Knox
Tenants, homeowners and investors alike are looking to more regional cities to fulfil their housing needs - take a look at the hotspots.
Market leaders in UK property investment, Knight Knox can provide investors with the best of regional buy-to-let, with properties in Manchester, Liverpool and Leeds.
This report has been created by Knight Knox using information that is correct at the time of print (October 2017). The report should be used as a guideline only, and should not be used in lieu of financial advice from an IFA or similar qualified financial professional. Knight Knox will not be liable for any financial loss, cost or expense incurred or arising by reason of any person using or relying on information in this publication.
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value increases steadily, promising a potentially sizeable return on investment through capital growth when you decide to sell. In the last 12 months the property market in London has been experiencing a steady decline, forcing investors to step away from the capital and look further afield to ensure solid rental returns.
The North has been making the most of investors’ attention straying from London, and with a much brighter picture being painted of Northern cities there are some clear advantages to property investment in the North of England.
Northern cities: The North of England is one of the most exciting regions in the UK. Northern England benefits greatly from being a leading employment and manufacturing hub, and has a population in excess of 14.9m spread across major cities such as:
1. Newcastle upon Tyne
10. Wakefield
2. Sunderland
11. Manchester
3. Durham
12. Salford
4. Ripon
13. Chester
5. York
14. Liverpool
6. Hull
15. Preston
7. Sheffield
16. Lancaster
8. Leeds
17. Carlisle
9. Bradford
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15 14 13
16
1 2 3 8 9 4 5
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7 10 11 12
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NORTHERN PROPERTY GUIDE - 2017/18
WHY THE NORTH? With property prices still affordable and a growing rental market, it’s evident that investing in the North represents a fantastic option for landlords who can be confident that properties will continue to be in high demand.
42,000 Anticipated number of new households each year across the Northern Region
With a number of world-class higher education facilities, job prospects expected to rocket and creative hubs like Salford’s MediaCityUK drawing in digital and media professionals, it is no surprise that more and more people are attracted to life in the North. The Leeds City Region alone has the highest concentration of higher education institutions outside of the capital, with nine universities producing
over 38,900 graduates a year. With large swathes of graduates in the North acting as the catalyst for business growth and start-ups, it would seem as though the very exciting future of Northern England is safeguarded. Aside from excellent education and employment prospects these cities are seen as a magnet for growth because of their thriving cultural scenes, improving transport infrastructure and
3.3% year-on-year house price increase in Northern England Nationwide, June 2017
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JLL, February 2017
What the UK government is investing in the Northern Powerhouse
£3.4 bn
£70 m
£13 bn
Allocated to the North through growth deals
For the Northern Powerhouse Schools Strategy
On public transport
Source: UK Government, 2017
high-quality leisure facilities. The North is home to many award winning museums, galleries, theatres, sports stadiums and music venues as well as a diverse and well renowned food and drink offering. This is reflected in the amount of tourism in the North, with the value of the visitor economy to Greater Manchester sitting at £7.5bn, attracting 115 million visitors a year and supporting 91,963 full-time equivalent jobs according to Manchester city council.
Significant investment in Northern business, leisure and infrastructure has resulted in an increased appetite for city centre living across the region and is continuing to drive tenant footfall to the North, particularly within the key cities of Manchester, Sheffield, Leeds and Liverpool.
in 2017, with house price growth in Northern England exceeding that in Southern England for the first time in eight years. Nationwide reported a 3.3% year-onyear increase in Northern England, while in the South prices were up 2.6%.
2016. This equates to an average rent of £631 in the North West. The combination of rising rents and property prices that are still very competitive compared to the rest of the UK has resulted in strong yields across the North. As of 2017, average yields of 5% in the North are higher in percentage terms than any other region in the UK, making investment here a very attractive option for landlords.
In August 2017 rents in the North West and North East of England rose faster than any other region in the UK according to Your Move, with an average rental increase of 3.2% over
The increasing number of people moving to the North has resulted in a sharp incline in property values
House Price Forecast (%pa) 2017
2018
2019
2020
2021
2017-2021
MANCHESTER
7.0
6.5
3.5
4.0
4.5
28.2
LIVERPOOL
4.5
5.0
3.0
4.0
4.5
22.8
LEEDS
2.0
4.0
4.0
4.5
5.5
21.6
UK
0.5
1.0
2.0
4.0
5.0
13.1
Source: JLL, February 2017
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NORTHERN PROPERTY GUIDE - 2017/18
COMPARISON WITH LONDON
Research from the Office for National Statistics shows that, in 2016, 291,620 people moved out of the capital, an increase of 36,480 from 2012 – the highest rate of people moving out of London since 2007.
The contrast between the North of England and Central London has been amplified in 2017, with many property experts reporting an enormous divide between the regions in terms of their property markets.
20% of the people who left the capital in 2016 bought a home in the Midlands or the North The Telegraph, 2016
GREATER LONDON As prices in Central London continue to rise, with the average cost of renting in London now sitting at £1,609, life in the capital is far too expensive for many. As millennials in particular continue to struggle with the unrealistic cost of property and living in London, many are choosing to move to the North where employment opportunities in cities such as Manchester are set to outperform cities such as Berlin and Tokyo, and affordability is far more manageable.
Avg monthly rent Avg asking price Yield
£1,593 £610,912 3.2%
NORTH WEST Avg monthly rent Avg asking price Yield
£697 £186,238 5%
Source: Monthly rent taken from HomeLet, asking price from Rightmove and yields from Your Move
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Research reported by the Telegraph shows that 20% of those who left the capital in 2016 bought a home in the Midlands or the North, up from 12% in 2014, demonstrating why buy-to-let in the North is burgeoning.
REGIONAL HOTSPOTS The key cities of Manchester, Sheffield, Leeds and Liverpool have attracted the interest of property developers and further investment from business conglomerates who recognise the bright future of the Northern regions.
Leeds Manchester
Liverpool
Sheffield
GDP Growth Forecast - Northern England (% change pa, whole economy)
1%
1.2%
1.3%
1.9%
2.1%
2017
2018
2019
2020
2021
Source: JLL, Oxford Economics, February 2017
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NORTHERN PROPERTY GUIDE - 2017/18
MANCHESTER
LEEDS The city centre residential market in Leeds is flourishing. With numerous young professionals drawn to a city renowned for being the largest centre for financial and business services outside of London, it is an area primed for substantial growth.
Manchester
Manchester, which was the spearhead of ex-Chancellor of the Exchequer George Osborne’s Northern Powerhouse initiative, is arguably the spotlight city of the North when it comes to investment. Manchester has undoubtedly proven itself to be the UK’s de facto second city, having established itself as a global centre of business, culture, sport and higher education. With a population expected to balloon to 625,000 by 2025, investment
management consultancy JLL has predicted a house price increase of 26.4% by 2021 in line with increased demand. As of October 2017, the average sold price in Manchester is £187,205, an increase of 12% on 2016 and 23% up on 2007. This steady growth is the result of a supply and demand issue caused by the great number of people flocking to the city to take advantage of good business opportunities and the affordable lifestyle.
Home to a number of business conglomerates, such as the Asda Group, First Direct, Centrica, Ventura, BT, Direct Line Group and Yorkshire Bank, the Leeds city region economy is worth
£62.5bn per annum, and the city’s economy has grown almost 40% over the last 10 years according to Leeds city council. In 2014, Leeds was promised one of the largest growth deals in UK history, looking to bring £1bn of investment to the region. The Growth Deal will improve travel infrastructure, nurture housing growth and redevelop town and city centres in the area. The Growth Deal will create at least 8,000 jobs and allow 1,000 homes to be built in the city by 2021.
The Leeds regional economy has grown almost 40% over the last 10 years Leeds City Council, 2016
Predicted house price increase of 26.4% in Manchester by 2021 JLL, 2016 Leeds
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SHEFFIELD
LIVERPOOL Liverpool has been the location of huge redevelopment in recent years, really putting the city on the map as one of the UK’s premier waterfront destinations. A massive investment programme is set to take place along the old docklands and the riverfront in Liverpool which aims to improve the city further,
making it the perfect place for young professionals to live and work. According to Zoopla, Liverpool’s house prices have grown over 22% in the last five years, and JLL predicts that rents in Liverpool are set to grow by 17.6% over the next five years, showing the city’s strength as a buy-to-let hotspot.
Sheffield
Investment from the government, and inward investment from large companies such as Boeing and McLaren Automotive, has resulted in significant growth within the Sheffield city region. The city is set to be a key terminus on the HS2 high speed rail line which will significantly reduce journey times to London, Birmingham and Leeds. In addition, the proposed Devolution Deal will drip feed the region £1.3bn over
House prices in Sheffield have increased approximately 23% over the last five years Zoopla, October 2017
the next 30 years, leading to improved infrastructure, transport, housing, and job creation, all of which will boost business growth. Sheffield has a student population of more than 60,000, with approximately 25% of graduates choosing to stay in Sheffield annually, according to the University of Sheffield. These graduates are the young creative types who make Sheffield the vibrant and exciting city it is today. With all that in mind, it is no wonder that Sheffield is being touted as the next big UK property market. Following in the footsteps of both Liverpool and Manchester, the Sheffield residential market is on the verge of a significant boom and has seen a house price increase of approximately 23% over the last five years according to Zoopla. Population growth of approximately 15% is predicted by Sheffield Council by 2035.
Liverpool house prices have grown over 22% in the last five years Zoopla, October 2017
Liverpool
Rents in Liverpool are set to grow by 17.6% over the next 5 years JLL, February 2017
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NORTHERN PROPERTY GUIDE - 2017/18
KNIGHT KNOX Knight Knox is an established property consultancy with a particular focus on city centre residential markets. Our approach is unique in that we specialise in many different parts of property development and investment, all of which are vital services for the benefit of individual private clients and small companies within the UK's private rented sector. By identifying land opportunities either for ourselves or on a jointventure basis with leading developers, we design,
implement and bring our product to market in a cost-effective way which allows clients to ensure they see the best-possible returns in competitive market sectors. With departments specialising in land acquisition, design, marketing, financing, lettings, property management and sales, we truly are one of the few companies that cover all aspects of the property life cycle.
The whole process from the initial reservation to the exchange of contacts up to the final legal completion is guided by their very friendly, knowledgeable and trustworthy staff. Any queries or uncertainties are answered almost instantly and they do their utmost to accommodate the clients’ needs. Overall, a truly remarkable service and I know for sure that all my future investments will be through Knight Knox.
Dr Nishil Haria
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KNIGHT KNOX PORTFOLIO
80+
58
£1 BILLION+
Total number of UK projects launched
Number of completed and tenanted developments
Total value of all UK projects launched
As featured in:
DEVELOPMENT PORTFOLIO
GREAT CENTRAL SHEFFIELD
X1 CHATHAM WATERS KENT
X1 MANCHESTER WATERS MANCHESTER
PALATINE GARDENS SHEFFIELD
NORTHILL APARTMENTS SALFORD QUAYS
X1 MEDIA CITY SALFORD QUAYS
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Knight Knox Quay West at MediaCityUK Trafford Wharf Road Manchester M17 1HH United Kingdom +44 (0)161 772 1370 www.knightknox.com This report has been created by Knight Knox using information that is correct at the time of print (October 2017). The report should be used as a guideline only, and should not be used in lieu of financial advice from an IFA or similar qualified financial professional. Knight Knox will not be liable for any financial loss, cost or expense incurred or arising by reason of any person using or relying on information in this publication. 1810 - V1