Residential

The UK’s public and private residential property sector currently faces a number of significant challenges...

1) Supply

The UK residential property sector is facing an uphill struggle out of the doldrums. Although Oxford Economics reports that there has been a tentative recovery in new housing starts over the past twelve months, with total private residential starts in England rising to 23,470 in the first quarter of the year (up from 20,360 in 2010Q1 and around 15,000 year earlier), this is still well short of the rates of house building in previous years when around 35,000-40,000 homes were started on average per quarter.

Capita Symonds has the skills to optimise the value and development potential of sites to increase the commercial viability of sites. This includes securing the right planning consent and obtaining the best price for construction.

2) Demand

Assuming a continued decline in the number of persons in each household (thanks to increasing longevity and higher divorce rates) the number of households is expected to rise by around 2.5m from 2011 to 2020. This means less available housing, especially for those starting on the property ladder. For example, by 2033, 19 per cent of the household population of England is projected to live alone, compared with 14 per cent in 2008.

We can’t change the economy or lenders’ policies. We can, however, ensure that homes are well designed and finished to maximise their attractiveness to buyers.

3) Prices

The implication of the continuing shortfall between the rate of household formation and the supply of homes will continue to exert an upward pressure on house prices. This will further restrict the ability of first time buyers to access the housing market. The implication is that existing owners will find it harder to sell their homes to trade up. It is suggested that much of the activity in the mortgage market is existing occupiers remortgaging to take advantage if historically low rates and invest in improvements to their existing home rather than moving.

By securing a consent that optimises the development capacity of a site and getting the right price for construction of a well designed, finished and presented product we can deliver projects that maximise the gap between development cost and value, making prices competitive.

4) Rents

This has put an intense pressure on private rented homes driving up rents rapidly in areas where there is a demand for homes, especially in London and the South East. A 4% year-on-year increase is expected across the country with higher rates of increase in high demand areas.

We believe that there is an opportunity to create a professionally managed private rented sector in the UK. Our skills in property management, maintenance and development give us confidence this can be done and are working towards delivering this.

5) Social Housing

In April 2012 the Housing Revenue Account held by each local housing authority will be changed. In essence each local authority that own houses will become an independent asset management body. This is having a number of consequences as councils look very closely at how they can use their housing assets most effectively to meet local needs. Amongst the consequences is the planned demolition of homes which are costly to maintain and manage. The introduction of a revised Right to Buy programme may also reduce the number of homes available for new households. Other initiatives such as those to reduce under occupation or bring empty homes back into use may, however, increase supply.

We are developing homes for social and affordable rent across the country. We can provide tested solutions to developing complex sites and delivering homes within strict budgets. With an established supply chain and working practices we can deliver projects quickly to take advantage of windfall opportunities.

6) Planning Policy

The Coalition Government has set out radical proposals for overhauling the planning process through the National Planning Policy Framework which reduces and condenses the guidance on making planning applications and includes a presumption in favour of sustainable development and developments promoting economic growth. In parallel with this the Localism Bill promises greater control over planning decisions at local level through neighbourhood plans.

These changes have been broadly supported by the development industry whilst conservation groups argue that the presumption in favour of development reduces the protection afforded to Green Belt and other open spaces.

It is unarguable that the current planning process with massive reports and extensive consultation processes represents a burden on developers whilst not necessarily guaranteeing the outcomes which communities seek in terms of design quality or the nature of developments.

Whether the drive for clarity and simplicity will achieve the outcomes sought or whether the absence of detailed guidance will increase the scope for interpretation and therefore increase the risk of legal challenges to planning decisions is yet to be seen. It is too early to judge whether this will increase markedly the construction of new homes.

Whatever the outcome of the consultation on the NPPF we will have a clear grasp of the issues and the ability to apply them to projects creatively to deliver value to clients.