Leeds has seen a remarkable revamp in the past ten years with various new features being added to the city. With the construction of swanky new shopping complexes such as the £350 million Trinity Walk complex, the planned renovation of South Bank (Europe’s biggest renovation project of the year) and the popularity of the city’s four universities, professionals and students alike have swarmed to Leeds bringing about a new lease of life.
Although the UK’s property market cool slowed in 2017, house prices in Yorkshire have recently recovered to pre-recession levels with Savills estate agency forecast house prices in Yorkshire will grow 17.6% over the next five years as opposed to the 14.2% national average. With the introduction of the Northern Powerhouse Initiative, in the three years since its launch the economy in Leeds has outpaced London.
This economic growth in Leeds has led to a large amount of professionals and students alike coming to the city having a knock on effect of an increase in rental values expected to increase in 3.5% per year over the next five years bringing Leeds as the top performer in Yorkshire. The fastest growing city in the UK, Leeds is a great location for both new businesses as well as seasoned businesses looking to diversify their network. Although 38% of the total output consists of business and financial services, Leeds also has one of the most diverse economies in the country meaning all manners of jobs are available in this growing powerhouse.
Over the years, the valuation of properties in Leeds have steadily increased and whilst these valuations may not be particularly exciting for those wishing to make large, immediate returns, the rise in city center living means regional city centers are outperforming the rest of the UK market. Also with more investors looking to invest in more Northern areas as opposed to the previously popular London, areas such as Leeds, Manchester and Liverpool have seen a large influx of residents looking to move to the area however struggling due to a lack of properties to accommodate them. Whilst this maybe unfortunate for prospective tenants, this does prove to be good news for investors in Leeds as there is a constant demand for properties. As a result, the number of HMO’s have grown exponentially in Leeds to accommodate this as many landlords see HMO’s a great investment particularly in a place as densely populated as Leeds. Providing a quick return on your investment, HMOs are steadily overtaking the number of single lets in cities. With less impact from arrears and rental void periods as well as a higher income of rent from tenants, does it still make sense to rent out single lets to the increasing Leeds population?
In the short term, no. In a place such as Leeds where there is such a large, single professional and student market, filling your HMO should be relatively easy for the right price and location. With multiple rents coming in, landlords can see high rental yields in comparison to single lets. The big difference however lies in capital growth. When converting a property into a HMO, the capital growth will increase at a substantially lower rate in comparison to a single let of the same initial value. Various reasons can result in this lack of growth such as physical wear and tear due to multiple tenancies and capped values in open market.
What makes Leeds an increasingly exciting place to invest in is the lower than average property prices and increasing property values. The introduction of the additional stamp duty surcharge comes in a bid to crackdown on investors purchasing ‘second properties’ making them more available to first time buyers. As houses prices in London are higher than average, investors are hit with higher tax resulting in increased popularity in northern areas.
The vast amount of investment into the improvement of Leeds has also significantly contributed to the interest in the area. According to visitleeds.co.uk Leeds has been highlighted as England’s most improved place to live and work in with business tourism valued at £500 million and the economy growing at a rate quicker than that of London. Over the past decade £3.9 billion worth of projects have been completed with £7.35 billion worth of projects either under construction or scheduled to be started. One of the biggest projects completed was the £600 million development of the Victoria Gate shopping complex in 2016 which was named the world’s best shopping centre at the MIPIM Awards 2017. Hotel construction had risen by 72% in 2016 (leeds.gov.uk) making way for increased visitors to the city.
Perhaps arguably the biggest project set for Leeds is the expansion of the business district South Bank. The base for headquarters such as Asda and DWF as well as smaller creative and digital media businesses, South Bank also houses newly developed campus buildings for the likes of Leeds City College, Leeds City College and UTC Leeds. The regeneration for this area is aimed to make it “a mixed use neighbourhood with new public spaces and a new city park, well connected to neighbouring communities with good public transport, with the waterfront and a world class train station at its heart” (southbankleeds.co.uk).
This regeneration will double the size of the current district, making way for 35,000 jobs and 8,000 new homes in an area which already has a reputation for one the fastest growing areas in the country in terms of digital and creative industries and an area where 10,000 students study every day.
The ambitious vision for making Leeds an economic British superpower surely would turn any investor’s head and with the increasing amount of money being pumped into the improvement in this bustling city, it would be foolish to miss out on this great opportunity.
