The Budget 2020
Infrastructure – Transport
As we suspected the budget didn’t come with many big changes to property as the global priority focuses on the coronavirus situation. One thing we did find interesting was the huge budget that will be set aside for infrastructure improvements. £640 billion is set to spent over the next 5 years under Rishi Sunak’s new plan. Many promises were made to improve transport around the country, although this doesn’t have an obvious link to property, it can help us find potential investment locations using the U.P.W.A.R.D.S. strategy.
First, there will be £27 billion set aside to improve Britain’s roads. Many of these are just to fix problem sections of roads, like increasing the number of lanes past Stonehenge (A303), which aren’t that useful to us. There are a few announcements that we could use; the A428 and the A46 are both expected to receive substantial updates to increase the flow of cars and cut journey times. This could act as an indicator of an up and coming area for the towns along these dual carriageways as they become better connected. It may also open up some rental demand for commuters further out from these towns as commuting becomes easier. These are quite niche situations but could help with your investing selection process. The A428 passes Coventry, Cambridge, Northampton and Bedford, and the A46 goes by Grimsby, Coventry, Cheltenham and Bath. The government also announced that £500 million will be set aside to repair potholes nationwide. They didn’t reveal any specific locations but did state that 4,000 miles of roads will be fixed. This could also be an indicator of an up and coming neighbourhood.
Next let’s go over the improvements to the railway system. £4.2 billion of the budget will be used to upgrade stations and railways. Stations are an important amenity that we look for when assessing an areas rental demand. So, here are the places where they have announced new or enhanced hubs: Preston, Halifax, Stoke-on-Trent and Cambridge. This may increase demand close to these stations. Enhanced train services will also increase demand and may make towns surrounding major hubs more viable with increased connectivity. One major project is the Midlands Rail Hub programme, which will boost services all over the Midlands especially for Birmingham, Derby, Leicester, Nottingham and the surrounding towns. This will increase the number of commuters into these cities. Preston and Sheffield (and surrounding regions) are also expected to see improvements.
Many of the budget’s infrastructure enhancements are being established to target high pollution from cities. Derby, Southampton, Bournemouth, Christchurch Poole and Halifax will all receive improvements to bus links in the cities. Buses are most useful for certain professional and student lets so could increase some rental demand in some areas of these cities. The Tyne and Wear metro will see an improved service improving connectivity for the North-East including Sunderland and Newcastle. Bournemouth, Christchurch, Poole, Derby, Nottingham and Plymouth will have big overhauls of their cycling infrastructure including introducing specialised paths and freeways. This could be an indicator of an up and coming area.
Sunak couldn’t go into too much detail in regards to many of these changes. Therefore, we should expect more details regarding the aforementioned upgrades in the comprehensive spending review coming later this year. In this review we will likely see even more projects that could be funded as the changes above don’t cover the whole £640 million budget attributed to infrastructure. So, we’ll keep an eye out for any more news on upcoming infrastructure transport information.
Infrastructure – Telecommunications
Last year a league table was created ranking countries by the quality of their broadband. The UK placed 35th, slipping in just below Madagascar. So, in the Chancellor’s budget he made mention of how they will spend big (£5 million!) to improve our broadband speeds and coverage. A good internet connection is such an important amenity for people nowadays that rental demand in areas with a poor network can drop. Even Zoopla and Rightmove have checkers on their websites for speeds and providers. So, this news that connections will become more homogenised around the country could make some areas more viable for property investment. There may have been an area that you have looked at before where a slow internet network was a limiting factor could now have much higher potential.
Infrastructure – Public Amenities
Some of the main public amenities we look for when evaluating an areas investment potential are schools and hospitals. They both provide their own rental demand being families and students/ professionals respectfully. This means we like to keep an eye out for any new schools and hospitals that are being built as they could provide opportunity. £7 million of the Chancellor’s Budget will be spent to open 11 specialist maths schools all over the country. No details have been revealed where these will be specifically, but the claim is that they want one in every region. We will keep an eye on any new information regarding these new schools. £6 billion is also being put aside for 40 new hospitals built all over the country also. We have no information other than this statement in regards to where these will be or their size but this could be see a huge increase in demand in the respective locations. £120 million is being put aside to improve existing schools and some of the £6 billion for new hospitals will be used to upgrade 38 existing ones. If these enhancements increase capacity of these institutions we could also see increases in demand in these areas too. The details for these changes were some of the vaguest in the whole budget so we will try to keep you up to date with major development.
The recent budget mainly focused on other areas of the economy but if you listened to the whole thing you would have picked up a couple of details that affect the property market. The main ones were:
· Stamp duty surcharge of 2% for foreign buyers of UK property. Will likely not affect most of us as we know many of you are residents. If you are affected it shouldn’t affect returns too drastically you will have to make sure you factor this increase into your calculations.
· £1.1 billion boost to the Housing Infrastructure Fund, meaning 70,000 new homes will be built. This will still not get them up to the goal of 300,000 built a year so will likely not affect demand. However, this will depend where they build them so we will keep an eye on this and make sure to update you with details.
· A £400 million fund is being created for councils to fund housebuilding on brownfield sites. A register will be made of unused brownfield land. Councils have pledged to fast track applications to demolish any buildings in these areas to add housing. If you are more interested in construction and more involved home providing projects in city areas then it may be easier to get a grant from local councils in the coming years.
· £1 billion will be used to create a Building Safety fund to remove unsafe cladding. If you are renting a flat in one of the estimated 320 buildings still with unsafe cladding it will likely be easier to get this removed now but may require speaking to freeholders and local councils.
There will be a second budget and a comprehensive spending review later on this year where we may get more details on any property changes after the coronavirus situation has calmed down a bit. Keep an eye on our updates as we will get them out as soon as we hear anything.