The Conservative Government’s ‘Levelling Up and Regeneration’ agenda has been widely discussed since they won the General Election in 2019.
Despite being a key part of their election manifesto, the agenda took a back seat in the past few years due to the Covid-19 pandemic. Now, as the UK moves along the road to recovery, we are beginning to see the early stages of the policy being rolled out.
Balancing the North and South divide
Traditionally, many businesses chose to invest and set up in the south of England, creating a wealth divide.
It meant that those living in the north of the country largely experienced lower incomes, higher unemployment and a lower standard of living than those in the south.
It’s a disparity that is still wide-spread today.
For example, the Institute for Public Policy Research thinktank the State of the North 2021, found stark inequalities when comparing levels of public investment in London and the south-east with that in the north.
The report estimated that London received the equivalent of £12,147 Government spend per head, while in the north the figure was only £8,125.
This polarisation can be seen in the huge gulfs in property values when comparing the South to North too.
For example, the average house price is £122,100 in Liverpool, £176,000 in Leicester and £169,300 in Manchester. When you compare that to an average of £399,900 in Oxford and £482,800 in London, the differences are stark.
What we are also seeing in the industry are lenders placing more focus on demand and marketability from the valuation and it certainly still feels like there is underwriting bias towards the South with not just higher loan sizes but also appetite for higher LTVs to be offered.
What is ‘Levelling Up’?
The central idea behind the government’s election promise, therefore, is to increase financial investment, or ‘level up’ the areas that have previously been ‘left behind’ or neglected.
This investment, it is proposed, will come in the shape of improved infrastructures such as transport, the building of homes, healthcare, and job creation, with the aim of stimulating money-making opportunities.
The government’s ‘levelling up’ strategies that have been cited include:
- Providing a legal basis for the setting and reporting against the levelling up missions.
- Devolving powers to all areas in England that want them, providing more control over budgets, transport and skills.
- Empowering local leaders to regenerate towns and cities and restore local pride in places.
- Improving the planning process, so that it gives local communities control over what is built and where it is built.
The Bill will undoubtedly open multiple doors for enterprising private businesses to support local economic growth, whilst rejuvenating town centres by reducing blight and enabling high streets to thrive.
The opportunity for commercial and development
The Secretary of State for Levelling Up, Housing and Communities, Michael Gove, has confirmed the introduction of “local design codes” which will give power to residents to decide what type of new buildings should be allowed in their area.
These important changes to compulsory purchase powers will give local authorities clearer and more effective powers to assemble sites for regeneration.
Therefore, there are several aspects of the ‘levelling up’ strategy that will have an impact on development and commercial in the local area, and will take skilled and considered town planning.
For example, regeneration will require and encourage more industry, which will in turn lead to a higher demand for commercial spaces. These will not only include warehouse or office spaces, but also other infrastructural property such as public buildings, including; schools, hospitals, retail and leisure spaces.
In addition, the new legislation could force landlords to rent out commercial properties, to minimise the number of shops currently standing empty for years, blighting the high street and wasting opportunities for new jobs.
Subsequently, investment in new residential property to house the expansion will be required. The increased permitted development rights should, in part, make housing schemes cheaper and faster to build, and give smaller builders greater opportunities to enter the market.
The need for specialist help
Brokers who have new investors trying to secure mainstream commercial or development finance may find themselves up against a variety of obstacles, especially for more complex planning or change of usage.
If you are struggling to secure the funding needed, this is where a specialist can help problem solve and drive your case forward.
At Crystal we recently placed and completed a case where the client had not managed to obtain required building warranties. This had largely been caused by supply chain issues and further funds were required to finish the development. We spent time understanding the causes and were able to provide an immediate solution.
Specialist partners can also provide you access to exclusive or more bespoke products, meaning you can access an even better deal for a client.
But the benefits do not end with monetary savings, brokers can also leverage a specialist’s expertise and guidance when choosing the best exit strategy and terms for a client too.
In conclusion, the ‘Levelling Up and Regeneration’ Bill will be powered not just by local decision making, but the enterprise and innovation of the development and commercial sector.
If town planning is done wisely and to a high standard, there is an abundance of opportunity on offer in previously economically neglected areas. Job prospects and living standards can be improved, and productivity boosted in these newly devolved areas.
Most importantly, regeneration projects should aim to stimulate a much-needed balancing of the scales and to eradicate economic disparity in the UK.
Jason Berry is group sales and marketing director at Crystal Specialist Finance
