Is Salford About to Slam the Door on HMOs? Proposed Article 4 Direction Raises Concerns for Property Investors
Forth Action Invest on January 24, 2024
As strategic planning across UK continues to adapt to the ever-changing landscape of urban development, Salford has taken another significant step in gaining control of its resident demographics with its proposed additional Article 4 direction, a move with substantial implications for property investors and landlords which could potentially remove permitted developments rights borough-wide. It’s an event that merits a closer look for those operating within Salford or those planning to invest in Salford in the future. Let’s unpack what this means for property investors and how they can navigate through these new waters.
Introduction
The world of property investment is often defined by legislation and regulatory changes. These not only shape the urban environment but also directly influence investment strategies and the viability of future property investments. Article 4 directions, which are implemented by local authorities, are one such legal instrument that can dramatically alter the landscape for landlords and investors, impacting everything from property values , Rental income & future acquisition targets. Investors without prior experience in locations with Article 4 restrictions often find it confusing. Article 4 essentially eliminates certain permitted development rights, specifically HMO conversions. As a result, properties will be required to obtain full planning permission instead to satisfy the council.
Background of Salford’s Article 4 Direction
Currently, Salford operates an Article 4 direction within its local planning regulations, designed to control changes of use from family homes (Class C3) to small Houses in Multiple Occupation (HMO) (Class C4) within specific areas. This was put in place in 2018 to address concerns over the increasing number of HMOs in certain areas and their impacts on local communities. However, Salford has proposed expanding the scope of this Article 4 direction, which suggests a growing concern within the council and more proactive steps towards controlling the rental demographic.
As per the recent data, Salford boasts a considerable number of HMOs, standing testament to the city’s thriving rental market. In 2021, approximately 1,500 HMOs have been recorded, marking a significant increase from only 1,000 HMOs back in 2015. This upward trend indicates a 50% rise over six years, reflecting the growing presence and influence of HMOs in Salford’s property landscape. The concentration of these HMOs is particularly high in certain wards, pointing to the response of a proposed expansion of Article 4 direction.
Proposed Changes and Implications
The details of the proposed additional Article 4 direction are critical for any property professional with an interest in Salford. It’s important to understand what this new direction aims to achieve and its potential impact on your business.
Wards currently affected by Article 4 direction 2018 in Salford.
- Kersal & Broughton park
- Broughton
- Pendleton & Charlestown
- Claremont
- Swinton Park
- Blackfriars
- Ordsall
- Salford Quays
- Weaste and Seedley
- Barton & Winton
- Eccles
Additional Wards proposed for Article 4 in Salford
- Little Hutton
- Pendlebury & Clifton
- Swinton & Wardley
- Swinton Park
- Walkden North
- Walkden South
- Worsley & Westwood Park
The implications are both immediate and long term. For Landlords in the Salford areas, this may mean red tape and constraints on how they can convert future HMO across the Salford Borough. Property investors would need to re-evaluate the potential costs association on new acquisitions factoring in the added costs of full planning permission should these additional wards be put in place. For property sources and estate agents, it would mean understanding and communicating these changes effectively to clients.
Impact on Property Investors
Property investors should pay close attention to the proposed changes and carefully consider their impact on existing and future investments. The implementation of a stricter Article 4 direction in Salford may lead to a reduction in available investment opportunities, particularly for HMO landlords.
While the potential borough-wide implementation of Article 4 direction in Salford may raise concerns, it could actually benefit landlords who own existing HMOs in Salford. These landlords may see a significant increase in property values due to the future limitations on new HMOs. As a result, there might be a surge in demand from investors seeking to convert properties into HMOs to take advantage of this situation before the changes come into effect. On the other hand, new property investors may need to consider exploring alternative investment locations or property strategies that are not subject to Article 4 restrictions.
Considerations for Landlords
Landlords must carefully review and keep an eye on the proposed changes and assess the operational adjustments they’ll need to make. If you already have a functioning HMO, you may want to consider ways to increase its value or adjust the rental income to align with the changing supply and demand dynamics. It may also signals an increased focus on compliance with local regulations, requiring a proactive approach that ensures all necessary permissions are in place and secured.
Conclusion
The proposed additional Article 4 direction in Salford represents a legislative response to the changing demands on urban housing. For those in the property industry, this underscores the constant need for vigilance and adaptability. With deliberate planning, it’s feasible to navigate such shifts and continue to build a resilient and profitable property portfolio, even in the face of regulatory challenges. The next steps are clear: stay informed, assess your standing, and take proactive measures to align with the evolving local landscape. For more information about investing in Manchester’s Article 4 location head to our past blog post here.