Housing industry

  • Are you in the market …?

    Delegates never return from the Federation’s Annual Conference saying they have seen something genuinely historic that will unlock new market opportunities for them. Yet, the opening of Grand Central – the new shopping mall above the redeveloped Birmingham New Street Station – has changed all that!

    In other news, from the Fed’s 2015 Annual Conference, Minister Greg Clark’s foisting of a voluntary Right to Buy regime onto the housing association movement is genuinely a historic shift, on a par with the 1988 Housing Act. Every significant association is now operating in the home ownership market. Regardless of size or inclination, they will be selling a chunk of their best rental properties and replacing them with sale or shared ownership products. The result of the NHF’s eight day “vote” on the voluntary code is a foregone conclusion. The large providers have already given their support and the counting will be by the amount of stock held.

    So, what are the key implications for associations?

    - All associations are in the home ownership business now. They will need to really understand their markets and their customers to a far greater extent than ever before. That will be a challenge – especially for those who are not already developing.

    - Decisions to reinvest in stock will have to be made in the context of the market – will this asset transfer as soon as the kitchen fitter has walked down the path?

    - The question of whether to renew sheltered housing assets has become even more difficult to determine.

    - Understanding the reaction of existing tenants will be pre-requisite intelligence for any major board decision. “Pay to stay” tenants will be at the front of the queue – and in some parts ethnic groups may also be very active in buying their homes.

    - Larger providers will use the receipts to spread risk and relocate their businesses into better markets thereby undermining the market where the RTB occurred.

    - Downstream, there will be much more competition for the remaining social rented stock as RTBs slide into private landlords’ hands.

    - This is going to produce interesting responses from the retail mortgage companies. Will red-lining of estates reoccur once defaulting follows the inevitable interest rate rises? Might this be a commercial opportunity to diversify into the private rental market?

    - The Minister’s two year replacement turnaround is very tight. Achieving the misleading 1 for 1 replacement will become a political and therefore regulatory issue in a couple of years.

    - And so on. This is a genuine paradigm shift. Government, regulator and the sector have only the broadest of ideas where the Birmingham announcement will end up.


    Given the housing crisis, RTB2 is clearly a daft policy. History will regard spending hundreds of millions of Pounds to end up with many fewer homes as immense folly. To disrupt the last remaining delivery mechanism for volume building in a recession will haunt future government’s economic policy. And undermining probably the strongest part of the third sector in Britain represents a cultural vandalism that weakens our civil society profoundly.

    So can associations make lemonade from the huge lemons they’ve been handed?

    Yes, but it will all hinge on using what government will pay in compensation quickly and effectively. Quickly, means replacing the lost property within two years, or the significant hole in rental income will be made deeper by the Treasury clawing back the compensation. Effectively, means using this opportunity to diversify into new markets – both locations and products – before the social rental base becomes too small to support significant growth. This can only happen where associations have a real and very precise understanding of their local housing markets. This forensic understanding can only be gained from real-time intelligence about what it costs to rent or buy down to street level and who their public and private competitors are.

    Like it or not, we’re all in the market now.

    Derek Long is a director at arc4, the housing and markets consultancy

    Category: News, Housing industry, Property, Social housing, Arc4 Tags: Social housing, Housing, natfed, right to buy
  • Arc4’s Derek Long on the Korean Housing Market

    The South Korean housing market is currently under immense pressure. Jeonse, its unique tenure form where tenants pay upwards of 60% of the entire value of the house, has become almost unaffordable in the first half of 2015.

    Arc4 director Derek Long, a keynote speaker to the government’s First International Housing Finance Forum in Seoul in 2013, was recently asked by Seoul’s equivalent to Radio 4's PM programme to bring a British perspective on what reforms could rebalance the Korean housing market as part of a discussion with local professors. Click the play button below to listen to the programme, which was broadcast at the end of July.

    Category: Housing industry Tags: Korea, Housing, Rent
  • When is a traveller not a traveller?

    As the echoes from Black Rod’s knocks on the Commons’ door at the opening of Parliament fade away, American tourists are about to be treated to another great British political tradition. One which is almost as venerable – the Passing of the Hot Potato.

    No one is quite sure when this practice started, but for generations, as an election looms, successive Secretaries of State at DCLG have pushed less appetising political morsels to the back of their plate for their successors to chew over. Airports, HS2s, awkward planning applications for fracking badgers, all tended to slip to the bottom of the red box to await the inevitable reshuffle. Such has been the fate of DCLG’s consultation on proposed changes to planning policy and guidance relating to gypsies, travellers and travelling showpeople.

    The consultation period ended on the 23rd November and students of Sir Eric Pickles’ 2010 Week One intervention into planning policy might have expected a Conservative-vote winning pronouncement in the run up to the election. That a decision has fallen to his successor may point to some major issues which will be a challenge for council planners and housing strategists – and not just in the arena of gypsies and travellers.

    CLG’s consultation sought to remove travellers who had settled permanently from the statutory definitions of “gypsies and travellers” and “travelling showpeople”. In essence, if you don’t travel, you can’t be a traveller. The confusion between culture and behaviour is one for the sociologists. But the logistical challenges for local authorities to obtain legally robust definitions of need are jaw-dropping.

    How can one prove someone has been travelling when they are not in your local authority ? How effective will projections of demand for pitches be, if there is a large reservoir of potential travellers impermanently “settled”?

    The pressure for officers to get the supply of pitches spot on will increase if CLG’s aspirations to strengthen limitations on new sites in “open countryside” are agreed. This is all the more important as loopholes over sites within Green Belt and Areas of Natural Beauty are to be sealed.

    If pitch supply fails to match demand, unauthorised encampments will increase – but under the consultation, meeting such unauthorised demand with permanent sites will be more difficult because “intentional unauthorised occupation” will be regarded as “a material consideration that weighs against the grant of permission". The creation of such Catch 22 situations will only create more uncertainty for officers trying to implement the law.

    Unless all these uncertainties are resolved, our advice to help local authorities is simple.

    1.  Make sure your assessments are up to date.

    2.  Use good consultants who have good communication channels with communities that can adapt to different local conditions

    3.  Keep good records – you’ll need them ! Robust evidence covering a range of issues about permanent sites and unauthorised encampments will put you in a strong position

    Overall, CLG’s response to the consultation has wider implications for planning and housing strategies. For example, the lack of an up-to-date supply of deliverable sites being downgraded from a significant material consideration to just a material one for temporary permission may well spread into other areas where housing supply is contested. Whatever the basis for Greg Clark’s recent decision to call in Maldon District’s development plan, the implications may be far-reaching. How such precedents play out for other aspects of social housing could leave officers in a planning no man’s land.

    So beware! A hot potato may be landing on your desk any day now.

    Category: Comment, Housing industry Tags: Travellers, Gypsies, Housing