Tag Archives for " Property development "

Will the NPPF achieve its aims? Property developers now have their say

It’s time to respond to the government’s aims for planning in the UK

The government has released more details of its plans to revamp planning in England. It wants to speed up the process as it attempts to drive housebuilding to 300,000 new homes each year by the mid-2020s. All market participants can have their say through the consultation process, which closes on 10^th May 2018.

In this article, we outline the main points of the announcement made by Housing Secretary Sajid Javid.

Planning permissions to be fast-tracked

The government wants planning permissions to be fast-tracked. It believes that this is the major bottleneck that is holding back building new homes. To accomplish this, the government is planning a major overhaul of the National Planning Policy Framework. This aims to:

• Get local authorities and property developers working together
• Include community groups to ensure that people and businesses affected by new developments have their say

Local authorities to be targeted on the delivery of new homes and not numbers planned

There will be a new housing test. This will focus on local authorities delivering new homes instead of the numbers of new homes planned.

Developers will also be targeted for the delivery of new home numbers

It is not only local authorities that will be targeted on new home deliveries – so too will property developers. The targets here will include delivery of commitments, including infrastructure and affordable housing.

Making brownfield land easier to access

Local authorities will be encouraged to release brownfield land for redevelopment, especially to build high-density housing.

Councils will be expected to free up underutilised commercial, retail, and industrial space to provide housing.

Protecting the green belt – building up, not out

Another aim of freeing up more brownfield land is to help preserve the green belt. Councils will be given greater freedom to allow developers to build up rather than out – like the ‘two extra storeys’ regulations being introduced in London.

Developers will have to prove their case

Developers will need to show that there is a positive environmental impact on its developments (especially where building up) and that developments protect ancient woodlands for future generations.

Building for the first-time buyer

Local authorities and developers will be expected to provide more developments for first-time buyers. There will also be a provision for an increase in the build-to-rent sector offering family-friendly tenancies, and affordable homes for key workers.

The gap between homes planned and homes delivered will be cut

The government wants to close the gap between homes planned and homes built. To aid this, a new approach to assessing the number of homes needed will be introduced. This should make it clearer for property developers to understand needs and what is expected of them. Councils will have greater authority to hold property developers to their commitments.

Can the NPPF deliver on its goals?

In delivering the announcement, Sajid Navid said, “An entire generation is being locked out of a broken housing market as prices and rents race ahead of supply. Reforming the planning system is the crucial next step to building the homes the country needs.

“This government is determined to fix the broken housing market and restore the dream of homeownership for a new generation. There is no silver bullet to this problem, but we’re re-writing the rules on planning so we can take action on all fronts. In moving to a more integrated society, the focus for everyone, whether a developer or a neighbourhood group, must be to come together to build the homes our communities deserve.”

It’s a noble mission, but several questions immediately spring to mind:

• Is the UK in a position to deliver?
• What sites are best for local authorities to release to provide a boost to the delivery of homes?
• How will small and medium-sized developers be supported to deliver?
• Will red tape reduce enough to enable more rapid development of homes?
• Shouldn’t public sector land be more readily freed for development?

We suspect that developers will want to take part in the consultation process. To read the consultation documents and respond, click the link below:

Open consultation: Draft revised National Planning Policy Framework

We’d love to know what you think, too. Call the Castlereach team on 0207 923 5680, and together let’s give momentum to the views of the property development community.

Live with passion

Brett Alegre-Wood

Medium-term outlook for property developers improves

Short-term struggles could evolve into medium-term demand

The RICS UK Residential Market Survey is one of the most important in the UK. It’s a great indicator of short-term market perceptions and one that helps to predict future trends. In this article, we look at the findings of the January survey, which was published recently.

New buyers and sales drift lower… again

For 10 straight months, the number of new enquiries from buyers has fallen. The number of new sales has now fallen for 11 consecutive months.

New instructions are holding back the market

The balance of respondents reporting an increase in new instructions eased back to its lowest level since May last year. At -17%, this was the fifth consecutive decline in new listings. The average number of properties that agents have for sale fell again and is now hovering only a little above the lows seen in June/July l2017.

The pipeline of new instructions is also weak

New valuations undertaken in January fell, too, by 10% from January 2017. Given this reading, it appears that the near-term pipeline is weak.

But there is more optimism for the future

Before getting carried away in the doom and gloom of it all, survey respondents have reported that they are more optimistic for the remainder of 2018. A more stable trend is expected to emerge as we move through the year, and the outlook is now ‘modestly positive’. A balance of +33% now expects sales to pick up over the next 12 months, with improvement expected in most parts of the country.

And pricing appears to be rising

It looks like house prices have started to grow more strongly, with the positive balance of those reporting price rises at +8%: unchanged from December 2017.

There are significant regional differences

Even though prices are again rising modestly strongly nationally, when examining the survey at a regional level there are some marked differences:

• Prices are fading in the South East, East Anglia, and the North East
• London prices are falling more steeply than in other regions
• The Northern West, Northern Ireland, and Wales saw the highest price rises

The high end of the market is still pressured

The high end of the property market continues to be challenged, with a fraction more than two-thirds of survey respondents saying that sale prices were below asking prices for properties priced above £1 million. However, once more an improvement has been reported, with the number of respondents reporting lower sales prices than asking prices falling by 4%.

Moving down through the price ranges:

• 56% of respondents reported sales prices lower than asking prices in the £500,000 to £1 million price bracket
• 58% of respondents noted that sales prices were the same as or higher than asking prices where the asking price was below £500,000

The 12-month outlook is more positive

Looking at a longer time horizon, the outlook is more positive. Excluding London, where respondents are still negative about the medium-term future, all regions expect the market to turn more positive as we head towards the second half of the year.

Even in London, the balance of those forecasting more price declines fell from -41% to -21% – this is the most positive survey result for six months.

Lettings are edging higher

Demand for rental properties has increased, while listings by landlords have eased back again. Thus, expectations for higher rental prices have firmed.

What might all this mean for property developers?

Undoubtedly, it appears that certainly, the first quarter of this year may remain tough for property developers. As we progress through to summer and autumn, things should get a little easier. However, with the balance of demand for lettings indicating a continued tightening of the rental market, it could be that investors begin to flex their muscles again sooner rather than later.

Higher demand for rental properties should translate into higher rental prices and better yields. This could reignite the fire in investors’ bellies, and prompt better sales of off-plan and new build properties to private rental sector investors.

Call the Castlereach team on 0207 923 5680 and let us help you connect with the investors that can make a real difference to your sales – investors who are investing today for long-term returns.

Live with passion

Brett Alegre-Wood

Could modular housing be the future of property development in the UK?

Benefits for all, now prefab building technology has advanced

With the UK experiencing a worsening housing crisis, modular homes are seen by many as the future. With faster delivery times than traditional bricks and mortar properties, these factory-built homes that are erected on-site could help the government deliver on its promise to build 200,000 new homes every year, rising to around 300,000 within a decade.

A new generation, a new style of prefab?

The idea of factory-built homes is not new, of course. They were first used to solve the housing crisis after the end of World War II. In around 10 years, 600,000 prefabricated homes were built to cope with the return of troops from abroad.

In the 1960s, as society changed, and people left their family homes at a younger age, demand for homes again exploded. In one year alone, 1968, the UK delivered 525,000 new homes. Many of these were prefabricated.

Today’s modern prefabs offer a range of benefits above their predecessors. These modular homes:

• Are constructed using longer-lasting galvanised steel frames
• Benefit from better insulation, giving greater energy efficiency and better soundproofing
• Include services and kitchens – almost ‘plug and play’

Modular affordable options

One of the arguments against modular homes is that they are as expensive as traditionally built properties. However, some developers are building modular homes that allow the buyer to decide the level of fixtures and fittings. This allows the buyer to buy a ‘shell’, and finish the internal to their own likes and dislikes. This reduces the cost of their initial purchase and is an idea applauded by London Mayor Sadiq Khan, who has promised to build 90,000 affordable homes in double-quick time.

This versatility of home styling makes modular homes ideal for inner city living, where there is a diversity of residents – young professionals, families, and older downsizers – all searching for their perfect home.

The downsides of modular homes?

Modern technology has improved today’s modular homes by leaps and bounds when compared to those of the 1940s, 50s, and 60s. They can be built faster, with a higher quality, and produce less waste.

However, the overall cost of modular homes is not cheaper than traditional homes, and financing of developments can be difficult. Even so, large-scale investors like Legal & General are teaming up with developers and housing associations to invest in modular homes.

Investment funding is a godsend to many developers building modular. This means less of their own money must be put down upfront to order the properties.

The big benefit for property developers

The biggest benefit for property developers is the reduced delivery times. This means they can sell or rent quicker, thus achieving positive returns sooner. There is also a lower reliance on a scarce traditionally skilled labour force.

Faster, lighter, and more eco-friendly

The benefits of modular building rack up:

• Development delivery times are greatly reduced with modular building methods – some homes have been made ready for buyers within six days after the site has been prepared
• Using either timber or light steel panels, buildings are lighter, too
• Deliveries of building materials are slashed, reducing traffic congestion and pollution
• Modular building is leaner and greener

Such benefits make developing inner-city sites – where brownfield costs are sending developers skybound – a more viable proposition. Developers can more easily build upwards, and this will mean a more effective ROI on the cost of land.

Made to measure for the next generation of development

Some modular manufacturers are already examining modular building as a solution to the next phase of inner city development – building on existing roofs. The Mayor of London has proposed that two storeys can be added to buildings where the skyline would not be adversely affected.

A modular rooftop building of 1,200 square feet is estimated to cost around £200,000, and like other modular designs can be customised to the buyer’s/occupant’s wishes. Once in place, it can be sold or rented at market value – and in London, this could provide an exceptional route to help relieve the housing crisis in the capital while boosting developer profits. Such a solution, where so many benefits, must surely be applauded.

Call the Castlereach team on 0207 923 5680 and let us help you connect with the investors that can make a real difference to your sales – investors who applaud the advance of modular housing developments.

Live with passion

Brett Alegre-Wood

Could co-living be the solution to UK homes affordability issues?

Communal developments are the homes that property investors want

It’s well documented that affordability issues are embedded in the UK’s housing crisis. People can’t afford to buy where they want to live. Affording rent is getting tougher, too. These issues are no more evident than in London. Happily, Mayor Sadiq Khan has come up with a plan to solve London’s homes affordability issues. He’s raised the target for new home delivery from 42,000 to 66,000. His London Plan will most surely be great news for property developers and people looking for homes.

Unfortunately, as those in the property development industry could have told Mayor Khan, finding land to build on and getting the necessary permissions to do so is rarely easy – even with planning requirements being eased.

We think that there’s a far simpler solution to the question of affordability in the UK property market, and it’s one that the market would welcome: property developers should build more co-living units.

The target is ambitious, but the how is undefined

The 66,000 homes target is ambitious. If it is delivered, it may influence the housing market in London. But it’s the detail that is disturbing for many. Mayor Khan wants 35% of properties on new developments to be affordable housing, and where the development is built by a strategic partner, this requirement rises to 60%.

The London Plan also emphasizes on smaller sites, delivered by a broader range of developers. What doesn’t the London Plan do is encourage co-living developments – surely a strategy that can be executed to provide the volume of affordable homes that Mayor Khan wants to see?

Co-living is a lifestyle choice for many

Once upon a time, people wanted their separate space. They wanted a home they could call their own. The reward of living in a capitalist country and working long hard hours. Like the saying says, “A man’s home is his castle”. But times are changing. A man’s castle doesn’t necessarily mean an individual home today.

Increasingly, people are willing to share amenities. Why? Because their lifestyle dictates that there isn’t a need for kitchens and lounges. In particular, young professionals and first-time renters – the hardest hit by affordability issues – are happy to rent co-living apartments, preferring to spend their money on their lifestyle rather than an empty space in an apartment in which they only spend a few hours each day.

What do people really want from a home?

People want some basics from a home. These basics include a private bedroom, bathroom, and cooking facilities. A space to put their treasured belongings, and a table at which to eat and work. Beyond this, people are far more willing to share areas such as television and games rooms, laundry facilities, and full-size kitchens. There’s a communal feeling about such homes that people desire, too.

In addition to these amenities, if co-living also means on-site gyms, public spaces and roof gardens, and 24-hour security, all the better. Smaller-style studio apartments that deliver this type of living are housed in hostel-type properties. Residents also have a further benefit: all costs are included in the rental price.

The son of a friend of mine has recently moved to such a property in London. To live in a traditional apartment in the same area, he would probably have to pay what he does just on the rent. On top of this, he would have council tax, utility bills, broadband costs, and so on to pay. And a daily gym session would probably cost him another £100 per month. This is a perfect example of how co-living apartment blocks can deliver the affordable homes that Sadiq Khan demands, and which the UK needs.

The advantage to developing co-living

Co-living quarters offer developers the opportunity to utilise space more effectively, delivering more homes. Different types of units exist side by side – single rooms, studio apartments, and larger two-bedroom mini-apartments. This mix of property type caters to a wider community, from student to young couples and small families.

It means people can afford to live near to where they work, in modern, secure, and functional homes. And because co-living spaces make it affordable to live near to work, commuting is reduced – pollution will fall.

First-time renters might further benefit from apartments that are furnished – another cost saving.

Additionally, people are becoming more mobile, as employers require workers to locate to different offices. Co-living apartments in hostel blocks are leased on very short-term agreements, aiding flexibility of relocation.

As you can see, there are advantages for developers, residents, and the environment.

Is co-living the answer to urban population density?

The UK is undergoing a major shift in living patterns. Homeownership is decreasing, while the private rented sector is growing rapidly. This isn’t simply due to affordability, but to lifestyle choices and the desire of millennials to retain mobility.

Cities the length and breadth of the UK are experiencing an explosion in inner city and city centre populations. Co-living, offering privacy when desired and the sharing of common areas, could be the solution to the affordability issue that the politicians cannot solve.

We’ve got investors lining up to invest in co-living properties. Call the Castlereach team on 0207 923 5680 and let us help you connect with them.

Live with passion

Brett Alegre-Wood