Will Leyland, 06 March 2020
With the recent news that the government has approved the initial stages of HS2, which will now begin shortly, questions have been raised about the impact to people living locally, or within close proximity of the proposed new stations.
The project has so far been plagued by delays, reviews and expected scrapping, but now appears to be going ahead with an eye-watering bill along with it. It’s almost impossible to predict the final cost as it has changed significantly a number of times already, but the current guess is at £106 billion.
It’s broadly seen as a positive step forwards and representatives of the regions it is set to connect have made encouraging noises with regards to the latest news but it’s hard to escape the feeling that it’s deliberately understated due to mistrust.
For homeowners and landlords who own property within these regions the news has been received positively as it increases access to high quality transportation and the inevitable boost to demand and prices that brings.
It’s not just good news for property owners in cities, but also more rural areas as it reduces travelling times to high productivity city centres and attracts more people from outside the regions to come and settle.
In the short term what we should see is an increase in demand for property around Manchester, Birmingham and Leeds. This in turn will drive prices higher, but also rents and yields as more people look for rental properties.
Of course, it’s impossible to tell whether house prices will definitely increase, and harder still to guess how much by.
What we can say is that judging by previous and similar projects that house prices almost always do increase in the surrounding areas that the project serves.
According to The Guardian, ‘if it’s anything like CrossRail, properties within a 10- to 15-minute walk away from a HS2 station will see house prices go up by 30% to 60% more than the prices of property “not in an area of immediate impact”.
CrossRail is probably our most recent and viable comparison in this context with regards to linking new areas together, so we could probably quite confidently say that property around the HS2 line will also increase.
There are many variables involved that classically dictate property prices. Proximity to good schools, amenities and transport will drive the base price, but we can expect that closer proximity to high-speed rail into other cities and London will drive that even further.
It’s good news for landlords in the regions as property in general continues its recovery following the general election. Prices and yields are growing again and 2020 is set to be a bumper year for buy-to-let.
There is also anticipation that the budget announcement in April could bring with it some attractive tax breaks. The expectation is that after some harsh changes in recent times that the government will be keen to win landlords back round again.
Property prices themselves have been rising and the housing supply for private renters is shrinking quicker than ever. The government does need to find a way to encourage more landlords back into the market, and some tax reliefs or incentives could go a long way towards persuading people back into buy-to-let investment again.
Will Leyland, 06 March 2020