Headline news from Q2 2022
- Manchester voted most liveable city in the UK (and 28th in the world)
- Leasehold Reform Act (ground rent) comes into force
- 77% reduction in available rental properties in Manchester
Manchester voted 28th most liveable city in the world in 2022!
(Economist’s Global Liveability Index)
Manchester has taken the position of most liveable city in the UK, after climbing 26 places from last year. Of course, we’re not surprised.
The results are derived from taking a number of factors into account, with a score being attributed to each. These include; stability, healthcare, culture & environment, education, and infrastructure, for which Manchester has beaten London (again). Housing and office spaces are of course a critical element to the infrastructure category.
While London is the UK’s centre for global business, it comes with a price tag. Not just for businesses, but also for the workforce. As a result, where young professionals may have previously chosen to move to London after graduating, the lower living costs and better living environment in other cities, such as Manchester is seeing them rethink. For businesses, London is a costly option both with the price per square foot for office space but also the increased operational costs making companies look at alternative options. This is known as North-shoring, where companies relocate further north, to take advantage of the lower rents and operational costs in the region. With a talented workforce of professionals already located there, it is becoming an obvious move for companies to make and Manchester has become a hotspot for north-shoring, and providing an ever-increasing job market for those living in and around the city.
It’s no wonder Manchester’s population is forecast to grow 7.5% over the next 10 years, well above the UK average of 3.83% (World Population Review).
Leasehold Reform (Ground Rent) Act
On the 30th June 2022, the new Leasehold Reform (Ground Rent) Act was introduced, affecting new leasehold properties sold in England and Wales. In the past, expensive and escalating ground rents caused a series of issues for investors and owners of leasehold properties, especially in scenarios where costs rapidly increased over a short period. The new Act changes the future of ground rents for new residential leaseholds in England and Wales completely. Ground rent increases are pre-agreed in the Lease, but with no restrictions in place, some freeholders saw this as an opportunity to sign leaseholders up to unfair ground rent provisions who subsequently had a challenging time trying to sell or mortgage their property.
The new Act abolishes ground rent for new and qualifying residential leasehold properties in England and Wales. With the new Act in force, the amount of ground rent on new leases issued after the 30th June has to be at a peppercorn rate, which in effect has a zero financial value.
10% rent increases with 100% occupancy across the portfolio!
The first half of 2022 saw a significant reduction in tenant turnover, resulting in new lettings across Manchester reducing by 26% compared to a year ago*. This stability is of course good news for landlords and has resulted in Manchester having 77% fewer available rental properties available since 2019*, despite the number of new developments completed in the city since then. With such a shortage of available properties, when tenancies are being renewed the price isn’t standing still – on average CERT’s property management team have achieved a 10% increase at renewal over the past 6 months across our portfolio. Needless to say, we’re proud to continue operating with a 100% occupancy level across our residential portfolio.
*Urban Bubble quarterly insight
Focus is now on improving and enhancing the terms and structure of new leases, from what would have been agreeable just a couple of years ago. Over these last 2 years, the primary goal was to secure a tenant and minimise the vacancy of a building, however with demand now soaring back, this has all changed. in any uncertain time. With demand now soaring back as companies lease new spaces to carry out their post covid working strategies and requirements, the amount of available prime office space is reducing.
This has certainly been seen in Liverpool’s city centre with 63,160 sqft of office space let during Q2 2022, an increase of 385% from the previous quarter.
Developments & Construction
Around the world, impacts of the various global factors are being felt across all industries, with construction being no exception. At the forefront of this is the supply chain – a critical component to construction, with materials needing to be on-site and available on time in order to align with the construction program, contractors and other suppliers.
This has become an area of particular focus for developers over the past few months, looking at ways to get ahead of the problem and to mitigate the impact this can have both on-site and financially. As a result, it is more important than ever to be agile in decision-making, looking at what materials are more readily available and adapting the build method accordingly to make use of these materials.
At CERT, we’re continuously developing new systems to prevent the need of procuring certain products in order to avoid a wait of up to 6 months for materials to arrive, and instead have a working knowledge of the supply chain for any particular component and adjust accordingly, to ensure works continue un-hindered with a consistent supply of the required materials to site, keeping the project on schedule.
The 3rd phase of our projects in Trafford’s Civic Quarter, Velocity is our newest residential scheme of 100 homes, adjacent to our completed and highly successful Kinetic & Insignia developments. In June we conducted our public consultation with local residents and key stakeholders. The valuable feedback gained will help us forge the final plans, ready for planning application to be submitted.
With a mix of apartments, townhouses and duplex apartments, Velocity is destined to be a further contribution to the regeneration of the Civic Quarter area of Old Trafford, a thriving residentially-led neighbourhood where people, placemaking, health and wellbeing, walking and cycling, all underpin new development.
With the drying out and replacement of any defects in the timber frame complete, having acquired the distressed site mid-construction, all remediation works of the existing structure have now been completed.
Now just 1 year away from completion, we’re well progressed with the M+E packages, and lining up to start work on the external façade in Q3. Following a lengthy lead in time, as a result of supply chain challenges, we’re looking forward to the cladding and brick slip panels being installed.
Royal Canal Works
Remediation works on site are now well underway, preparing the ground in readiness for the piling works to commence later in the summer. Running alongside the canal, these works have to be done exceptionally carefully by a specialist contractor to ensure that no contamination escapes into the water whilst the groundworks take place.
Following the completion of the piling matt earlier in the quarter the 60-ton piling rig arrived on site and completed the drilling of 8 holes. These have then been filled with reinforced concrete, which has now set. A steel cage, which is currently being fabricated, will then be laid around the chimney and filled with concrete, creating the foundations for the 8-meter supporting metal frame which will brace the chimney. With the chimney secure, works will be able to commence with vigor, starting with the excavation of the ground.
We were pleased to welcome two new members to our ever-growing team during the second quarter of the year.
Mia joins our team in Liverpool, as Operations Coordinator, located at Elevator Studios. Already part of the music scene in Liverpool, Mia will be helping to further build our community of artists and organising future events.
Jake has joined our team in Manchester as an Investment & Development Analyst. Moving from M7 Real Estate where he was their Fund Analyst, he will be responsible for debt and financial analysis, a critical role in structuring developments and investment, both current and future.
Have you listened yet?
May saw the launch of our new property podcast. The series will cover a range of property-related topics, catching up with expert guests from asset managers to mortgage brokers, to help you gain a deeper understanding of the property industry. Click below to listen on your favourite streaming platforms.
The Greater Manchester Combined Authority has announced that its long-term plan, Places for Everyone, has moved into its next phase. Insider Media.
Rightmove published its July House Price Index report, Rightmove.