Those currently living and working in Manchester city centre and searching for a 1 bedroom flat are witnessing supply and demand issues for this type of property.
George Osborne’s intention to help first time buyers, and make the rental property market less appealing to investors, has resulted in lenders being subjected to increased red tape surrounding the lending of money for buy-to-let properties. Landlords with more than one property on the rental market were advised to re-mortgage their portfolio of properties before these criteria came into force in September 2017, and lenders must now assess the entire property portfolio of a prospective borrower. The result of this is that investors are choosing to sell the less profitable properties within their portfolio and this has been noticeable in my search for a flat.
Is there Policy backed Council support for developers?
Manchester City Council has a Policy backed focus for development within the City Centre area which requires 27.5% of new housing across the plan period (2009-2027) to be located in the City Centre area. Coupled with the identified requirement for one and two bedroom properties, as shown in the 2008 SHMA, there would clearly be support from the Council for the delivery of this size of property.
Greater Manchester’s Mayor, Mr Burnham, has promised a ‘radical’ change to the Green Belt masterplan and to redraw the Greater Manchester Spatial Framework without releasing much needed land for new houses. I am of the view that housing demand will only ever be met, countrywide, by the release of such land and without a Green Belt review, the demand currently seen in the city centre could only be exacerbated in the longer term.
At a National level, the Government’s consultation on a standardised approach to calculating housing need has a clear disregard for the housing needs in the North of England.
Typically, what can be found on the 1 bedroom flat market?
Many one bedroom flats appear to be placed on lower floors, with unappealing aspects and no natural light or act as a noise buffer to the lift shaft for the more expensive two bedroom flats. That being said, there is an avid one bedroom housing market in Manchester city centre with properties being taken off the market quickly.
What can the price per square foot of new flats play in bringing new houses to the market?
Zoopla quotes the average price per square foot for a flat in Manchester City Centre as £293. With this in mind, one bedroom flats that are coming to market typically do not meet the average price per square foot, a matter which will of course influence the mix of future developments, and the outlook of city centre developers.
In London, one bedroom flats range significantly in size, where as in Manchester I am seeing only a handful of developments comprising smaller one bedroom flats and these appear to be delivered by new builds. In terms of the size of one bedroom flats suitable for a first time buyer; a yuppie targeted “entrepreneur studio” comes in at approximately 300 to 350 square foot and the more spacious flats with balcony or outdoor space can reach up to around 600 square foot. Is it now perhaps time for Manchester to follow suit and seek out more city centre developers who are able to offer expertly designed, well-located and usable one bedroom flats that have a smaller floor space, but are built with first time buyers in mind.
London based Pocket Living are a good example and they have caught my attention as they have recognised the gap in the market and are delivering new and much needed good quality one bedroom flats. A Pocket Living scheme in Croydon boasted one bedroom flats for first time buyers at approximately 442 square foot and they claim that the apartments are around 20% cheaper than the surrounding market – an impressive feat in any location, let alone in London!
How can the playing field for investors and first time buyers be levelled?
Many new flats are being sold off plan to investors because of the high yield that can be achieved for a one bedroom flat on the rental market. It seems unlikely that many first time buyers are willing to buy off plan.
Osborne’s attempt to deter investors from the private rented housing sector could benefit from additional backing by the planning system. One solution to this could be to ensure, by using a suitably worded planning obligation, that a certain percentage of new city centre (not just Manchester) dwellings are reserved, for a set period of time, for people with a “local connection”. This phrase is often included within planning obligations for rural areas, although the same could be applied to city centre developments. One criteria for someone having a “local connection” in Cheshire East Council for example is: “currently lives or has lived within the administrative area of the Council and has done so for 6 out of the last 12 months or 3 out of the last 5 years”. This simple approach would help first time buyers get ahead of investors when looking to buy in city centre locations.
What can be done to meet the demand?
There is an evidenced demand for one bedroom flats in Manchester city centre. There is Policy backed Council support and an identified need for these types of dwellings; the market is ready and waiting for a developer to supply well designed and innovatively laid out dwellings that are made available to first time buyers.