This year, the event included the new housing and planning minister Alok Sharma, who gave his first major public address at the conference. As well as hearing how he plans to reshape UK housing policy, we also learned what Brexit means for the sector, what position Build to Rent has to play in coming years, and what modern methods of construction are on the horizon.
Delph’s Acquisition team members, Robert Haynes and Adam Connor, attended Resi 2017 with a few questions in mind, here’s what they learnt:
How is the new housing and planning minister Alok Sharma planning to reshape UK housing?
Sharma came to Resi with a clear response on how he plans to reshape UK housing and whether he will meet the list of demands that PW put to him. He addressed the five actions proposed by PW in his keynote that he will carry out:
Act on housing white paper promises and proposals
Put pressure on local authorities – £2.3bn fund for housing and infrastructure; so far 150 local authorities have applied for the funding, which needs to drastically increase
Secure the certainty of Help to Buyfuture – £8.6bn is committed up to 2021
Ensure access to quality labour force after Brexit and consider modern building methods as in Germany and Scandinavia
Be bold on the Green Belt– reassessing Green Belt land to see if more can be released for development policy in exceptional circumstances
Sharma also went one further than the white paper in his keynote, expressing his opinion that the housing crisis needs to be met with more than just efficiently produced homes; the new homes need to prioritise quality – both in physical standard and in customer satisfaction. Watch the highlights of Alok Sharma’s keynote speech at Resi.
What does Brexit mean for property sales?
Surprisingly to some, Brexit hasn’t had a big impact on property transaction numbers, which have leveled at around 1.2m per year for the last 4 years. However, interestingly, there has been a swing towards first-time buyers purchasing more property, rather than up-sizers and Buy to Let (BTL) landlords.
Why has this happened?
The new Stamp Duty Land Tax(SDLT) regulations have hit up-sizers and those purchasing more expensive properties, who therefore choose to stay put rather than moving at high expense, which has resulted in reduced transactions made by this buyer demographic. This is the same case with BTL landlords; the new SDLT combined with the fact that income is taxed before expenses has squeezed this sector as landlords are not seeing such good returns as previously.
How has Brexit affected the construction industry?
Brexit has affected SMEs, which has an important impact on Delph as we work with many SME housebuilders. Large house builders currently have the same output as prior to Brexit, but SMEs are building far less.
This is mostly due to funding obstacles and market risk. Delph can help with both and we are happy to take market risk and unlock potential developments.
For example, sometimes a lender will have requirements of a developer that they must pre-sell all the units in a scheme before they will lend, as it is otherwise deemed too great a risk. This has led to an increase in developers looking for this kind of deal and, as that is exactly what we offer at Delph, it has worked in our favour. The fact that we can offer deposits of up to 40% is also another string to our bow as it gives lenders that much more confidence.
Our recent white paper, Mind the Funding Gap, considers the decline of SME housebuilders’ activity and market share in the UK construction industry.
What role does Build to Rent have in fixing the UK’s broken housing market?
Build to Rent (BTR) is an emerging sector and has had a relatively quick take up in the UK, compared to the US for example, which has had a strong BTR market for 30 years.
The mentality towards renting is slowly changing and many people who will rent in a new BTR scheme will do so out of choice. There are lots of benefits to renting that are now widely recognised; it allows a level of flexibility that is important for global professionals who may be relocated at short notice. BTR schemes commonly offer more facilities too; the serviced apartment trend is becoming an essential perk.
When considering a BTR scheme, design and quality are very important not just for the building itself but for the services provided, something that echoes Sharma’s call for the property sector to champion quality over quantity and put renters and occupiers’ satisfaction first.
Many schemes are coming forward but successful ones will have the residents as the customers and will not be driven by making a quick profit. Therefore, management will be key to retention and retention will be key to longevity and success. Something that keeps coming up as a tool to aid this relationship management is the presence of digital media – whether it’s through virtual viewings, instant chats or social media, our customers want (and deserve) a direct line of communication.
Key considerations for the BTR sector moving forward:
Up to 70% of BTR renters are women, so security is very high on the list of priorities
Residents want to digitally design their flat layouts before moving in
Residents want to be able to feedback to building managers easily using their mobile phones
Residents want to organise room hire or arrange building social activities via their phone
The Hallmark, Manchester – Concierge foyer
The BTR demographic is changing in line with the trend towards renting over owning; the BTR renter is not just the young professional who hasn’t saved up to buy yet, but also the senior professional, downsizer and everything in between. The view that BTR is only catering to young people is inaccurate and must change.
Delph Property Group – Robert Haynes, Senior Acquisitions Analyst
Delph Property Group – Adam Connor, Acquisitions Analyst
Get in touch if you have any questions or would like to meet up to discuss your project.