Since their formal introduction via the Cities and Local Government Devolution Act in 2016, metro mayors have quickly become figureheads for urban revival in the UK. These directly elected city leaders are assigned devolution budgets intended to expedite the growth, influence and economic performance of regions outside of London. In a relatively short space of time, metro mayors have already had a significant impact on boosting the economic performance of the city regions they represent. Their growing importance was further underlined during the most recent Spring Budget, with the government acknowledging the progress made by metro mayors when their powers are decentralised from Whitehall approval for spending in key policy areas.
As residential development lenders, Precede Capital is wholly focused on identifying both the macro and micro locations that are going to generate strong demand from buyers and renters in the future. Regions with metro mayors present natural targets for the kind of financing solutions that Precede Capital offers. This is a result of their mandates to drive economic growth and powers over the construction of new homes, as well as access to grants such as the ‘Brownfield Housing Fund’, a scheme which supports the regeneration of derelict, abandoned and industrial sites.
It’s also worth noting that metro mayors are largely unencumbered by – and somewhat independent of – the party politics of Westminster. Their goal is singular – improve their regions. This simplified approach leads to clear-cut objectives and decisive policy which stands in stark contrast to the kind of muddled central government legislation, fraught with delays, of which housing policy has become emblematic.
First elected as mayor of the West Midlands in 2017, Andy Street has energised the region with a number of important policy moves. And the housing market has clearly benefitted; according to the latest Birmingham Crane Survey, 2022 saw 13 new schemes and 6,487 residential units constructed across Birmingham alone, with the overall number of schemes under construction increasing by almost one-third compared to 2021.
It’s this type of engaged and proactive leadership which makes for a robust and attractive housing market. Precede Capital’s latest deal, a £188 million five-year loan to fund the development of Great Charles Street in Birmingham’s historic Jewellery Quarter, was one of the largest financings outside of London for a BTR scheme – an achievement heralded by Andy Street himself. Our conviction in the location was borne out of a firm belief in the underlying fundamentals of Birmingham as a city, boosted by the strength of its local leadership.
Indeed, some of the other reasons that the deal and location were attractive – such as a growing graduate population (with 46% of its 80,000 students planning to remain in the city post-graduation) and a dynamic tech hub (with the West Midlands named the country’s fastest-growing tech sector) – are also indirect effects of effective local government.
For example, transport investment has been increased seven-fold since 2017, with new train lines and stations, bus routes, a tram service and a planned expansion of Birmingham Airport. Efficient infrastructure offers an important hook needed to attract businesses and build a thriving economy that makes an area desirable to live and work. Under Street’s investment-driven agenda, Great Birmingham continues to flourish as one of the UK’s largest regional economies, with a gross value added of circa £40 billion according to data from the Office of National Statistics.
What’s more, the successful hosting of last year’s Commonwealth Games represented a major vote of confidence in the city, with £800 million of earmarked public investment continuing to drive regeneration. Street has successfully devised a government-backed plan to devolve the remaining budget from the games to local leadership with the aim of reinvesting this in the region.
The presence and recent impact of an empowered city government was also a factor in our recent decision to extend a £227 million four-year development loan to finance the construction of First Street, a multifamily development in Central Manchester targeted at new graduates and young professionals.
Much like Andy Street in the West Midlands, Greater Manchester’s Andy Burnham has put removing red-tape around regeneration, improving infrastructure and encouraging investment at the heart of his agenda. He’s been instrumental in driving forward the region’s plans for a “London-style” transport system and has also taken a direct approach to tackling homelessness in the city. When this kind of engaged leadership meets attractive underlying demographic trends – Manchester has the highest population growth rate in the UK, with the majority of newcomers aged 20-34 – the case for planning, financing and building homes becomes much stronger.
When thinking about the potential of a new development, we look at the location holistically and from the point of view of prospective residents. What amenities do they want to live near? How are they going to commute to work? Where are their children going to go to school? Helpfully, these very same questions are front of mind for the likes of Street and Burnham.
As their role becomes more defined over the coming years and the government presses ahead with its levelling-up agenda, the influence and power of metro mayors will surely grow further. That can only represent good news for the housing markets in Birmingham, Manchester and beyond.