Housing providers have more than doubled their income from private rent, shared ownership and market sale properties in recent years. According to the Homes and Communities Agency, in 2015 the largest 332 English housing associations – which own more than 95 per cent of the sector’s homes – raised £1.1 billion from outright home sales and £924 million from first tranche shared ownership sales.
Yet, with these rewards come increased development risks. The regulator the HCA warned in its Global Accounts earlier in 2016 that ‘it is more vital than ever that the sector continues to manage the range of operational risks to its income and cost base’. To help housing providers access the benefits and manage the risks of private rental, shared ownership and market sale, Homes 2016 has launched the inaugural PRS and home ownership event. This is free of charge for housing professionals and will run alongside Homes 2016 in the same venue at London Olympia on 16 November.
PRS and home ownership will focus on three key areas: funding, homes and marketing. A number of free sessions will explore these themes, hearing from some of the leading builders and cutting-edge thinkers in private development. Here is a flavour of what to expect.
The majority of conversations we have are on mixed-tenure sites. The dominant model is shared ownership, with some private rent and build for sale too. There is a lot of toe-dipping going on in market sale housing just now – especially using windfall sites, through local authorities for instance. ‘Investors are very happy to be investing in bonds that help fund mixed-tenure development. They see the housing association model as a good one to be able to deliver a variety of tenures. Also, as an alternative to investing in gilts [government debt] or even in commercial property, housing association bonds are viewed as a pretty good investment. A number of institutions feel they are underinvested in housing association bonds.
‘The majority of mixed tenure investment is in southern England, although there are pockets outside this region in the North West and the east Midlands ‘Ultimately the availability of funding is not the main issue – it is availability of output. It is finding sites and then obtaining planning permission. There is also a lack of corporate confidence among FTSE 250 companies to invest in building more homes.
The question is what can the government do to reassure the market? The autumn statement would be an opportunity to do this.’
> Piers Williamson, Chief executive, The Housing Finance Corporation, will be speaking alongside Elizabeth Froude, Executive director, resources, Genesis on Wednesday at 10:00.
‘Orbit launched its private development team in 2009 and has since built 500-600 homes for market sale in locations all over England. The team now has 30-35 staff and we will build around 260 market sale homes this year – up from 222 in 2015. In addition, we are building around 500 shared ownership homes this year and have just launched our first two private rented schemes.
‘We have done this by essentially having our own private development arm and have recruited most of the team from the private sector. The big developers do what they do for a reason, so we operate in almost exactly the same way a private developer would: we project manage and contract directly with the various trades required to deliver our homes.
‘Yes, this means we take on more development risk, but we have assessed this and feel it is worth it for the following three reasons: - We have greater control over the quality of what we build - We get a better price as there is no middle man to pay - We can control the speed at which we build ‘The skills needed to do development management for market sale are very different to those needed for affordable housing. We have to get involved in the technical issues around surveying and groundworks, and then use this information to renegotiate the land price if necessary. We have to be nimble in terms of contract management and in responding to market signals.’
> Paul High, Executive director, property investment, Orbit will be speaking at Homes on Thursday 11:45-12:30
‘The housing sector has an image problem. Half of the people out there still think housing associations are the council. There is still work to be done explaining who housing associations are and what they help do to tackle the housing crisis.
‘We market properties across market rent, shared ownership and market sale. I would say as a sector we have overcomplicated much of what we do with regards to customers – particularly on shared ownership. There is so much we can learn from private developers on how simple they have made the marketing around Help to Buy, for instance.
‘We set up our Fizzy Living brand for our market rent as we wanted to give ourselves the best chance of engaging with our target market of professional under 30s living within the M25. TVHA stands for trust and great experience in working with arrange of people, but its focus on providing affordable housing for people in need is not a natural fit with our target market.
‘We are now focusing on Generation Z those born this millennium] and how they are communicating, as they are our future customers. Typically they communicate using around six platforms and we need to go much further to reach and inform their thinking about accommodation in adult life and how we can provide solutions to that.’
> Kush Rawal, Sales and marketing director, Thames Valley Housing will be speaking alongside Justine Elliott, Sales director, Lovell on Wednesday at 14:20.
ALSO HEAR FROM...
John Knevett, Group commercial officer and Deputy chief executive, A2Dominion
Luke Cross, Editor, Social Housing
Download your Homes 2016 preview to view the full programme.