If you’re considering developing property in North East England, you’re not alone, and you’re certainly not off the mark.
The region has become a magnet for investors, developers, and landlords alike. Why? Well, it comes down to a combination of affordable entry prices, high rental yields, and significant long-term growth potential.
In this guide, we’ll break down everything you need to know before putting a spade in the ground, from planning policies and construction costs to the most lucrative locations and the region’s booming rental market.
Why the North East?
The North East is currently one of the most affordable regions in the UK to buy property, with prices sitting around 44% below the national average, according to recent market data.
Yet affordability doesn’t mean stagnation. In fact, house prices in the region have risen by 21% since April 2020 (source: PropertyData) and are forecast to grow by 11.7% over the next five years – the highest predicted growth of any UK region, according to Savills’ 2025 residential market forecast.
If you’re a buy-to-let investor, there’s more good news. Y
ields in parts of the North East can reach up to 9.45%, particularly in postcodes like TS1 (Middlesbrough) and central Newcastle, making the region one of the most lucrative for rental returns.
Planning, Permissions, and Regulations
Before you jump into your next development, there are a few legal boxes to tick.
Planning Permission
Most developments, whether new builds, conversions, or major extensions, will require planning permission from your local authority.
Each council in the region follows the National Planning Policy Framework (NPPF) but sets its own Local Plan, which guides development over the next 15 years.
Zoning and Land Use
Understanding zoning is important. You’ll need to distinguish between:
- Brownfield sites: Previously developed land, often found in urban areas. Easier to get planning approval and often prioritised.
- Greenfield sites: Undeveloped land. Approval is more challenging unless the site borders an existing settlement.
Building Regulations
Once approved, your project must comply with UK Building Regulations, which cover everything from energy efficiency and fire safety to accessibility and structural integrity.
Costing It All Up
Construction costs in the UK vary, but here’s what you can expect when building in the North East:
- Average construction cost: Around £2,210/m², based on national data from Costmodelling Ltd (April 2025).
- Typical range: Most builds fall between £1,320 – £3,100/m², depending on the type, complexity, and specification of the building.
Don’t forget to budget for:
- External works: Add 10–20% for site preparation, landscaping, roads and drainage.
- Risk allowance: Typically 10–15%.
- Professional fees: Around 5–15%, varying by project size.
VAT and land costs: These are not included in build cost estimates and can significantly affect your bottom line. - Materials sourcing: Partnering with a reliable building supplies company can help manage costs and ensure quality throughout your project.
Where Are the Hotspots?
Newcastle upon Tyne
Newcastle remains a standout city for property investors. It boasts:
- An average house price of just £128,000, compared to the UK average of £254,000 (ONS).
- A strong student population of over 50,000 across Newcastle and Northumbria Universities.
- Yields of up to 6.8% in city centre locations, according to Home.co.uk.
Neighbouring Gateshead is also seeing increased attention due to its regeneration projects and lower average prices.
Middlesbrough
Historically known for its industrial roots, Middlesbrough is reinventing itself as a tech and digital hub, driven by Teesside University. With up to 9.45% yields in TS1, it’s a rental powerhouse.
The town’s “Boho Zone” is fostering start-ups and media companies, making it attractive to young professionals and students alike.
Sunderland
Sunderland is also on the up. It offers:
- Rental yields from 5.7% to 9%
- A growing focus on digital industries and advanced manufacturing
- A university helping fuel steady student housing demand
While there are fewer private rental properties than in Newcastle, that only means there’s more room for growth.
York
Although traditionally pricier than other North East cities, York remains a solid bet. It’s home to two top universities and has Enterprise Zone status in the city centre.
With over 25,000 students and a healthy inflow of professionals, demand for housing remains high.
Getting Started
Thinking of breaking ground? Here are a few final tips:
- Get pre-application advice from your local planning authority. This can help you understand any red flags before submitting formal plans.
- Consult neighbours and the local community early to avoid objections later down the line.
- Build good relationships with planning officers, they can be invaluable in guiding your project.
- Tap into funding like the North East Property Fund, which supports small and medium-sized residential and mixed-use developments.
- Plan your logistics: You might want to consider local storage units for securely storing building materials and equipment during your project.
Building in The North East – An Exciting Opportunity
The North East is no longer just an under-the-radar opportunity – it’s fast becoming one of the most exciting regions in the UK for property development.
Whether you’re eyeing up a student HMO in Sunderland, converting a terrace in Middlesbrough, or planning a new build in York, the combination of rising demand, rental returns, and property price growth makes now an excellent time to get involved.