URBAN BLIGHTS TO NORTHERN LIGHTS? THE EFFECT OF AUTONOMOUS SPECULATIVE INVESTMENT IN UK HOUSING MARKET RENEWAL AREAS

Abstract

The UK has in excess of one million homes affected by low demand, a figure that represents approximately five percent of Englandís housing stock. High levels of multiple deprivation, increased vacancy and negative perception intrinsically plague many of these communities. At the forefront of initiatives addressing low demand is the Housing Market Renewal (HMR) Pathfinder scheme, a government policy designed primarily to improve market conditions in the north of England. The HMR is also addressing the issues of low value, dilapidation and diminishing population. The principal aim of this research is to offer preliminary findings to examine the extent to which autonomous speculative investment is contributing to the objectives within the HMR programme, with specific reference to Manchester. Manchester has undergone a massive amount of economic restructuring since the 1970ís that has given rise to both a population decline and an increased number of derelict land and buildings in some parts. In recent years, property values have fallen and the rate of abandonment has increased, with negative equity being a harsh reality for many homeowners. The lack of quality homes and uniformity in the housing stock, plus social problems of high crime and unemployment, are seen as threatening the drive towards delivering sustainable communities within these areas. Residential development in the city centre has been a strong impetus to improving the housing stock across its inner core. Investors have responded well to the opportunities available in residential regeneration of UK city centres, and Manchester has been no exception. Investment in Manchesterís housing has largely been driven by the growth in population of young professionals as a consequence of recent booms in finance and business services employment. This quantitative paper analyses a wide range of economic and development statistics, including an examination of planning data and property sales over time. These findings will be supported by a number of structured interviews with key investment companies, in order to gain a firm insight into the potential impact speculative investments are having upon Manchesterís HMR. The results of this paper will highlight the role speculative investors are playing in initiating new residential development across Manchester and the planning data analysis contained within this report shows that following the introduction of the HMR initiative in 2003, this has increased. Evidence also suggests that a major driver of house price increases, in many low demand areas across the North, is the buy-to-let market. Many investment companies have been established in Northern England to benefit from the anticipated booms within these areas as house prices become increasingly unattainable in London and the South East. As a result of these trends, many aspects of the UK sustainability agenda are under threat, none more so than affordability. Whilst, affordable housing is an essential requirement of the Sustainable Communities Plan, the predominance of speculative investors in the HMR areas is appearing to impede negatively upon its progress, with house prices continuing to rise beyond the reach of many low to middle income groups. These findings have important ramifications for UK regeneration policy related to the governmentís Housing Market Renewal programme.