Expanding airport capacity in the UK has been a hot topic for years. The South East of England has taken the limelight in the political debate, as Gatwick and Heathrow became the top contenders for expansion proposals. For big business, Heathrow has always been the preferred option. However, it has also attracted the most criticism from both Tory MPS and local residents alike, claiming that the expansion would increase noise pollution due to low flying aircraft over nearby schools.
Despite the opposition, Theresa May’s government ministers approved the long-awaited decision at a cabinet meeting on Tuesday 25th October 2016. Transport Secretary, Chris Grayling, described the decision as “truly momentous”, indicating that the expansion would improve both trade and jobs. But what do the proposed expansion plans mean for property?
Due to delays in decision-making, the construction work is not likely to begin until at least 2020. This means that Heathrow’s third runway won’t be fully operational until 2025. That being said, effects on property in the surrounding area are expected to take affect long before more flights start coming in and out of Heathrow’s runways.
Heathrow airport is already the third busiest in the world, so it is unsurprising that the surrounding office market, in locations such as Slough, Maidenhead, Bracknell and Reading, is already thriving. A staggering 120 of the UK’s top 300 company HQs are based within a 15-mile radius of Heathrow airport. The Thames Valley is already home to giants like Apple, Cannon, GlaxoSmithKline and Toshiba. With stronger international transport links and more connections proposed between the UK and China, more multinationals are expected to relocate to this area over the coming years, boosting demand for commercial property and pushing up prices. Further job opportunities in the region is not only good for the local population, but will also attract other professional residents looking to move closer to their workplaces.
This in turn should further support house price growth in surrounding areas. Noise concerns from aircraft are expected to have very little effect on the residential property market. As a result of Crossrail plans and on-going regeneration projects, Slough is already experiencing a huge increase in property prices of up to 19pc per year, which is twice as fast as the rest of the South East. Reading and Wokingham have seen prices increase from 28pc to 33pc between 2014 and 2016 and the rate of increase is expected to go up further as a result of the confirmed runway expansion. With more people looking to move to these well-connected suburbs and business hubs, perhaps it is prime time to invest in property in Berkshire. Obviously it is still very early days to pin down exact rental price increases, but it is likely that Berkshire property will fetch even higher rental yields over the coming years. Arthur suggests keeping a close eye on Berkshire as the next residential property hotspot and a huge potential for investment!
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