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Earlier this month, Her Majesty delivered her 67th Queen’s Speech outlining several reforms in the pipeline for the property market. The UK government is striving to transform the property market in order to ensure a strong post-pandemic recovery.
The Queens Speech touched on several key points, which will, directly and indirectly, affect the property market. The real estate sector welcomes the adjustments as the market takes another sustainable step towards a positive and promising future.
“With the Government focused on ‘levelling up’ the UK and bringing forward new legislation to modernise the planning system to achieve this, the property sector will undoubtedly play a fundamental role in supporting communities across the country to build back better.” – Melanie Leech, Chief Executive, British Property Federation.
Planning Reforms in the Pipeline
Currently, developers submit planning applications and await a response from the local council. The government now plans to automate this process creating a much more flexible system.
During the announcement, the new Planning Bill was uncovered. The latest bill, albeit long-awaited, will introduce changes to the planning system across England. Improving the system will diminish the barriers and obstacles people are currently facing and speed up the delivery of homes.
Automating Planning Permissions
It is no secret the property market is facing a chronic housing shortage, resulting in the continuous inflation of property prices. Speeding up the planning process and simplifying the system will benefit the sector considerably. At present, it can take an average of seven years to update a local plan. Cutting out the red tape will reduce this time significantly.
Planning permissions can majorly prolong construction timelines, resulting in a domino effect of delayed schedules. Dividing developments into categories will create a smooth and efficient planning process. The categories are split into the following:
For instance, the system will grant permission automatically on land designed solely for new homes, schools, and hospitals. This is because these developments will be categorised under ‘growth’. Therefore, eliminating the chance for local authorities to reject the plans.
Therefore, this new systemic approach with automated planning approvals will result in developments being built faster. Without compromising the quality of new builds. As a result, the gap between the substantial imbalance of supply and demand will narrow.
Digitalising Systems and Embracing Technology
In order to implement an effective and strategic system in the property market, it is vital to adapt to the traditional way of working. This essentially means modernising the approach to future-proof the sector. The current planning system is a slow, tedious and manual process. Embracing a digital approach, and transforming the document-based process into a digitalised service will prove to be efficient and convenient. Therefore, increasing engagement from residents and local authorities.
Latest Reforms: Leasehold and Renting
In the Queen’s Speech, the Government also proposed new ground rent legislation for leasehold properties. New leasehold properties may see an end to ground rents.
Over the years, many changes have been made to the private rented sector. Later this year the tenancy law will be reformed under the government’s consultation response. Thus, abolishing Section 21. As it currently stands, Section 21 allows landlords to evict tenants with a six-month notice period. As part of the Renters’ Reform Bill, all evictions would need to go through the courts.
Property Market Booster: Improving Infrastructure and Connectivity
The government has also outlined strengthening the economy across the UK by improving national infrastructure. This is especially important as connectivity and accessibility indirectly affect the property sector. To improve both bus and rail routes, the government will be looking to renovate connectivity. This includes the High-Speed Rail, Crewe to Manchester Bill.
If you are still questioning the profitability of property investment, you should consider the external factors influencing and benefiting the sector. Improving infrastructure will result in an increased quality of life for residents, with regular and efficient transport services. Therefore, a highly desirable area for commuters and working professionals. Ultimately, this will boost rental demand in the area.
Furthermore, the government proposes to extend the 5G mobile coverage and gigabit cable broadband. This comes as great news for property investors, as improving digital connectivity will continue to attract residents to the area. A new law around Building Safety Regulations will also be established.
The Queen’s speech outlined many of the plans proposed by the government which will positively impact the sector. The new legislation reforms under planning, renting and leasehold will pave way for many aspiring homeowners to step foot onto the property ladder.
Simplifying the planning process and embracing technology will tackle the substantial lack of housing supply by speeding the building process. The new rules will bring forth additional housing at a much quicker pace. Thus, correcting the imbalance between supply and demand which has been intensified by the extension of the stamp duty holiday and incredibly low-interest rates.
This effective housing strategy will result in increased homeownership across the regions. The measures solidify the government’s objective to ‘build back better’ to recover from the pandemic. As the UK aims to build back faster, there will be more properties available for people to buy, invest in and rent. This is a positive step towards increasing housing stock availability across the UK to tackle the chronic housing shortage.
In terms of investing, one thing that has been made evident over this ambiguous year is that property investment holds its position as one of the most stable assets. Reducing the supply and demand imbalance will create a sustainable marketplace. Building more homes will increase the number of renters in the market as more properties become readily available.
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