We are in the midst of the Conference season for political parties and trade unions in Britain. We all have a lot on our minds, with generational constitutional issues to the fore, but these have come to the fore after many years of concerns building up about citizens’ ‘place in the world’.
The most directly relevant example of peoples’ ‘place in the world’ is the home they live in and the town centres they visit. Both these are crucial factors that political will can improve – or can let drift. In this article we look at housing. Hardman will be publishing on the possible imminent trends in town centres and other segments of the UK property market, shortly. Here, we share our thoughts – and enthusiasm – on the current new trends in rental housing supply.
Radically new sources of supply have come to deliver housing and to make changes to town centres just in the past three years, or less. This is likely to prove to be only the start of new investment – and it does not rely on the usual febrile excitement of property booms. Indeed, it benefits from the absence of such a boom. There is plenty to be optimistic about.
We have a UK housing shortage, yet there are always new methods of expanding supply. This certainly is the case right now. In one way, money is not the problem. It might seem controversial to say that substantial investment is available for expanding housing supply, but consider that, in the past 23 months, some £2bn of equity has been raised by a sector of the investment world that did not exist two years ago: the stockmarket-quoted REITs (real estate investment trusts) investing in residential real estate. This is a whole new seam of investment, with much more to come – iconoclastic indeed.
Investing institutions seek vehicles to provide long-term, secure income streams. Social or affordable private housing generates such income streams. This demand is being supplied – right now. The investment supply is also into homes as places to deliver care, in a much more personalised setting. Developers have the expertise and land is available (much from public sector owners). One thing needed is money but the other is the ability of investors to bring together different agencies – local authorities, planners and developers. Investors by their nature are able to embrace the mantle of the ‘middleman’ and the public sector can choose to embrace that too, or watch from the sidelines.
The expansion in housing which is not for private sale to an owner occupier or buyto-let investor has gained one more type of supporter. One such fund out of several possible examples, Civitas Social Housing, has raised £652m (click here to read our Civitas Social Housing initiation note) and has deployed all this equity to expand supply through a combination of new build and providing finance into the Registered Provider (housing associations) sector. This is all going into housing for social rent, occupied irrespective of the individual’s ability to pay rent from their own resources. Importantly, in the case of the supported living sector (for people with long term disabilities) where Civitas and others operate, the cost of care reduces significantly when the individual lives in one of their houses as opposed to a large institutional setting.