Property Interview: City living is changing, the property sector has to keep up
“NOW, and very possibly in the future, there is nothing left empty,” said Jonathan Morgan of Morgans City Living, specialists in lettings as sales in Leeds, when asked about the lack of residential property in the city.
“It’s not a great position to be in,” he said. “The city is desperately trying to get the next generation of developers developing for the future, for what we see as huge latent demand.”
Mr Morgan said that between 1997 and 2007, the company had sold 4,000 apartments, but he said there had only been a few hundred apartments actually completed in that same period of time.
“If you don’t supply stock, there’s nowhere for people to live. We’re fully let, and we manage a massive number of apartments.”
However, Mr Morgan said, getting a bank to fund a speculative development specifically to rent has become increasingly difficult, though if a fund agrees to buy the completed product in Private Rented Sector scheme, a developer can bankroll it speculatively themselves – but this is still a risky business, he said.
“The PRS debate rages over here. There are schemes in all cities, but we have found it hard to make it work in Leeds.
“PRS I get frustrated with,” he said, “it’s not the solution to the housing market issue – the answer is to supply more mid-level and starter houses, and bring in premium products for rent.”
“In no way will it change supply or demand in the housing market, although it may provide relief for pressurized areas of the market, it caters to the higher rent sector of the market.
“I just don’t see it as this far-reaching solution to fundamental problems in the housing market.
“But the fact is,” he said, “there is growing demand, and any new way of increasing housing stock must be welcomed.”
“There is growing demand in cities,” he said, ” and an interesting tenant demographic. The typical ‘city liver’ has changed. In Leeds, they are very much under 30s, professionals, mostly coming from this part of the world.”
Only around 10% come from down south, according to statistics from Morgans.
” A lot of them are spending less than 30% of their income on rent, which suggests headroom for higher rents, but more speculative development is needed and must be encouraged.’
On the millennial generation, he said: “Don’t underestimate the power of social media – this has been the first time this country has been through a downturn with social media at the core of communication.
“A mindset is transferred between peer groups much faster, and post 2008, we have this idea that it is not a good time to buy, and before you know it, a whole generation thinks it’s not a good time to buy.”
“So the odds are certainly stacked against the first time buyer, but I don’t believe the claim that homeownership is going down.
“Banks have been shut, accessibility to mortgage finance has fallen, thresholds for deposits have gone up. The property market has been through the most incredible downturn in tumultuous times. How can you measure a market in that context? Inevitably people renting as a proportion has grown.”
He said that the likelihood is that we would move towards a model of long term renting, more similar to our European counterparts, or shared ownership with the advent of Plumlife over the Pennines in Manchester.
“More people will rent for longer but ultimately, the aspiration is still to buy. It is a very strange time for the property sector,” he said.