3 areas where innovation will help UK property developers build faster


Support and creativity needed to hit homebuilding targets in the UK

If the UK is to have any chance of building the government’s target of 300,000 new homes each year by the mid-2020s, it’s becoming clear that some big changes will be needed in the property development sector. This is going to require a more innovative approach in three key areas: planning, finance and construction. If other countries can put a rocket under new home numbers, shouldn’t we be able to do the same?

Property development planning

The planning regime in the United Kingdom is mostly working to rules developed two or more decades ago. While this is beginning to change – finally, government and local authorities have realised that the process needs to be streamlined and sped up – it’s still got some way to go to match planning processes in other countries.

Finding sites and getting consents is imperative to building hundreds of thousands of new homes each year. The slower and more laborious this process, the fewer homes are likely to be built.

As an example of what can be achieved, in Singapore, there is a much simpler planning process. From the start, developers there are provided with master plans that show what can and cannot be built. This forward-thinking approach means that developers can move much faster, safe in the knowledge of what they can build and the margins they could make.

Property development financing

Increasingly, we’re seeing innovative financing options being used to fund developments abroad. Crowdfunding and peer-to-peer lending, for example.

In the United States, where development debt is more expensive, property developers use debt in tranches, settling as milestones are reached. They do this by repaying the current debt tranche with new, cheaper financing options.

Options that developers are beginning to use more commonly in the UK include mezzanine debt and equity, as well as providing more opportunity for off-plan investors to buy property at earlier stages. But the regulatory environment does not help developers access more innovative lines of financing easily and certainly does not help smaller developers.

Property development construction

While city centre sites are developed for multiple families, suburban and out-of-town developments remain focused on providing single-family homes. These homes take months to build.

Property development in other countries is managing to keep pace with demand by encouraging multi-family properties, and then building for co-living** (with common areas such as gardens, gyms, laundry rooms, etc.). In addition, single-family homes and multi-family apartment blocks are increasingly built using modular housing* strategies.

*Read our article “Could modular housing be the future of property development in the UK?”

** Read our article “Could co-living be the solution to UK homes affordability issues?”

In Sweden, eight out of 10 new single-family homes are built using modular, prefabricated housing techniques. In the United States, 80% of new multi-family developments (more than 20 units) receive planning permission within three months, with around 50% completed within 12 months (United States Census Bureau, New Residential Construction).

Multi-family, co-living properties enable developers to build for different demographics, different needs, and different budgets – providing housing for more people faster.

In summary

We seem to struggle with redefining the three key areas needed to speed up the delivery of new homes in the UK. Maybe this is the problem – we’re trying to redefine and remodel the whole system, almost ‘from scratch’. Perhaps the government is making it too difficult. We don’t need to rewrite all the rules on a blank piece of paper. We just need to look at how other countries are managing to meet ambitious homebuilding targets, and then pinch a few ideas that work.

There is much that the UK property development sector could learn from looking abroad. But it relies on the lead from the government. Developers are already seeking new and innovative ways to build properties and raise finance to do so. The government must provide the structure that makes this innovation practical.

The government has started with making changes to planning permission law. This should make it easier to build on inner-city sites, and build up, too. But, small- and medium-sized developers will require support – including with access to cheaper financing.

Get your new development off to a flying start. Contact us at Castlereach by calling 0207 923 5680. Discover how our access to a global database of property investors keen to buy UK property could help you.

Live with passion

Brett Alegre-Wood

About the Author

Brett has over 20 years experience in all facets of property, he owns various companies centred around property and is the driving force behind the education and training at Castlereach. His companies have sold over £850 million in UK and London property and he manages over 1200 properties through his estate agency chain. Today he shares his time between UK, Australia and Singapore. He is married to Arlene and together they have 4 kids. Brett holds both the Level 3 Property Mark Qualifications for Property Sales and Property Lettings and Management.