
Tackling the Housing Crisis
How do you solve a problem like the UK’s housing crisis? Blackstock Consulting sat down with a host of industry experts to discuss exactly that.
Modular housing has the potential to play a crucial role in delivering the homes needed to meet the government’s ambitious 300,000 homes a year target.
Speeding up delivery will be essential to meeting these targets, and given that offsite manufacturing, on average, delivers homes twice as fast as traditional construction, many in the sector believe it will have a major role to play in tackling the housing crisis.
But if modular is going to deliver on its promise and secure the necessary investment and gain public trust, educating investors, policy-makers, local authorities and consumers will be crucial.
Tackling the negative connotations attached to prefabs which continue to tarnish modular’s reputation will be a crucial first step, both from both an investor and consumer perspective. A unified message from the sector will be fundamental to achieving this.
“We need a feedback programme to build demand for the modular product, and I think that in itself will generate capacity and give businesses the confidence to build new factories across the country,” says Val Bagnall, managing director of Apex Airspace, a modular housing provider.
Consumer confidence in modular homes will be based on its build and design quality, according to Michela Hancock, managing director of construction and development at property developer, investor and manager Greystar UK.
“People don’t necessarily know, nor do they care if their home is a modular product. What they do care about is the quality of the product and if it’s sustainable and well-run,” she said.
Dave Sheridan, executive chairman of off-site manufacturer ilke Homes, believes this flexibility does not negatively impact design quality.
“Modular doesn’t just have to be for the entry-point house, it can be designed to be aesthetically pleasing. You can dress a modular product to be extremely attractive.”
However, more support will need to be seen at the local level according to Andrew Prickett, UK Head of Residential at Faithful+Gould and Tony Dicarlo, Developer and Investor at innerspace Homes if modular is to achieve its full potential.
The last housing minister Kit Malthouse and housing secretary James Brokenshire both backed offsite construction during their tenures. Indeed Malthouse said of the 750 home deal between ilke Homes and Places for People that it showed the UK blazing “a trail in the modern methods of construction that are transforming home building.”
However, convincing local authorities to embrace modern methods of construction is proving more difficult.
“At the central government level, offfsite and modular is hugely supported – they are really backing it, but that’s not filtering down to local government and definitely not the planning system where it is not even in the National Planning Policy Framework” Tony DiCarlo, founder of modular house builder Innerspace says.
Andrew Prickett, director, UK head of residential at project and programme management consultancy Faithful and Gould, suggests that access to land and scaling up pilot schemes would be a step towards accelerating the widespread adoption of modular and offsite.
“Let’s back SMEs, new thinkers and innovation and let’s scale up. Instead of smaller pilot schemes, we should think more ambitiously and consider 200 to 300 homes developments,” he says.
“We could have a pre-assumption that new council houses are built using this technology unless there is a watertight business case for not doing it,” he adds.
In her first speech as Housing Minister at RESI 2019, Esther McVey made it clear that encouraging home-ownership was a clear priority. But how will first time buyers be helped onto the housing ladder now that Help to Buy is being scrapped?
The harsh reality is that is not a one size fits all solution to the problem.
“Help to Buy was born out of the post-recession world and has since gone from being a safety net to a jetpack for profits at some of Britain’s biggest housebuilders. Rescuing firms was the number one aim of the scheme with little thought being given to when the market eventually stabilises,” says Adam Challis, head of living research and strategy at JLL.
Vanessa Hale, director of research at BNP Paribas Real Estate and chair of Urban Land Institute (ULI), agrees with Challis, but praises some companies who are actively seeking to diversify.
“HTB certainly has a political slant that we’re going to have a hard time getting away from, but housebuilders, such as Telford, who have been moving towards increasing their proportion of build-to-rent homes, are looking towards solutions.”
Telford Homes, which recently entered two build-to-rent partnerships with asset manager M&G Real Estate and Invesco, accelerated its shift towards the build-to-rent sector last year, accounting for 70 per cent of the company’s development pipeline.
During the discussion, panel experts shared the consensus that there isn’t going to be a ‘one size fits all’ solution to life after HTB.
“A one size fits all approach will fail. What the market needs going forward is a range of products such as build-to-rent and shared ownership”, says Challis.
Mergers, modernisation and a focus on expanding shared ownership are helping housing associations take centre stage in fighting Britain’s housing crisis. There is a huge opportunity for joint ventures and collaboration with the private sector. Yet according to two leading G15 members and the head of the sector’s trade body, there is still a huge shortfall in grant funding needed to provide adequate quantities of social housing.
Tackling this will require more funding, strategic partnerships, and a cohesive, long-term investment strategy from the government.
According to the National Housing Federation (NHF) , housing associations are receiving roughly just a tenth of the grant funding needed, with the government spending just £1.27bn on affordable housing, making housing one of the smallest government budgets.
“What we need is a long term investment package from the Government. We were asking for £12.8 billion a year. It’s a lot of money, but it means we could deliver 145,000 affordable homes each year which we know we need over the next decade,” says Kate Henderson, CEO of the NHF.
“Our research shows we need around 90,000 social rented homes each year. Last year we built 6,000. We are an incredibly wealthy nation but some people’s housing needs simply won’t be met by the market alone,” she adds.
Alan Strickland, director of external affairs and resident involvement at Optivo, agrees that more government support will be crucial.
“The government needs to continue investing in social rent, and it’s absolutely critical that people can continue to have a home they can afford. Fundamentally, both on affordable homes for rent and for sale, housing associations totally stand ready to help, to invest, to build and to work with communities.”
Shared ownership is one crucial tool that housing associations can promote to boost home-ownership. Fundamentally, this method means that even with increasing property prices, people on an average salary will have a chance to be able to afford a home.
“We have a big development pipeline with shared ownership and we’ve been doing it since the 80s. It’s a hugely resilient product, it is the most affordable way that people can get onto the housing ladder.If you’ve got a £500,000 property, then £125,000 is the equity share that you can buy. All in all, you’ve got people who are on about £35,000, and they can afford to buy there. So it is affordable – it’s the only way a lot of people can live in London”, Geeta Nanda, chief executive of Metropolitan Thames Valley, explains.
To listen to more of PropCast, Blackstock Consulting’s podcast series which focuses on relevant industry topics with top professionals in the space, subscribe to our podcast via Apple Podcasts, Spotify or SoundCloud.

Later Living: teaching an old sector new tricks
If there’s one thing for certain, it’s that we’re not getting any younger. By 2024, one in five of Brits will be 65 or over according to the ONS.
As well as having huge implications for the £121 billion of social security spending going towards pensioners, this wrinkly eventuality also means needing to rethink how we deliver housing.
Investors are already waking up to this fact and so we are beginning to see the emergence of a dedicated Later Living sector, which promises to shake up our retirement living in much the same way as Build to Rent (BTR) has done to the wider rental market.
Whilst retirement homes have historically been more last resort than holiday resort, this nascent sector aims to offer an aspirational community solution to housing older people who are still young at heart but who recognise that their needs are starting to shift.
This means something different to different providers, which range from McCarthy & Stone’s varied, yet traditional village homes, to the likes of Legal and General with its urban-focused Guild Living brand and suburban community-focused Inspired Villages Group.
Over-65s currently own 6.5 million homes in England. If Later Living schemes resulted in even 5 percent of these re-entering the market, it would result in more available housing stock than every new development achieved in the past year, and free up homes for families and first-time buyers.
Proof of the Later Living concept can be found in the United States, Australia, and New Zealand, all of which see over 5% of over-65s choose purpose-built senior housing. Only 0.5% of the same demographic do so in the UK, indicating scope for enormous growth.
In fact, a 137% uplift in investment for Later Living is predicted over the next five years according to global property consultants Knight Frank. This growth will likely be spread across all price points – just as we’ve seen in BTR – as well as a move away from being a predominantly leasehold model to include more rental options as well.
However, if the Later Living sector is to realise its true potential, then a number of issues need overcoming.
First, is the current perception of retirement housing. Right now, there are two extremes: hospital-style care homes for those hanging around the pearly gates or five-star luxury living accessible only to the super-rich. Given that almost £3 trillion of housing wealth stored up by the over 50s, there’s clearly a growing market for platinum pensioners. But any mass market for product will need to be inclusive.
Second, are our tax and planning regimes. Currently downsizers have to pay stamp duty on any new property they purchase, which is a massive financial disincentive. While many are likely to reap a significant windfall from decades of high house price inflation, the idea of stumping up tens of thousands of pounds to move somewhere smaller – even if more convenient and better suited to your living needs – is understandably unappealing.
Our new prime minister Boris Johnson has made positive noises about stamp duty reform in the past, however this week chancellor Sajid Javid has been flip-flopping around the issue. Let’s hope to see some follow through and some actual legislation to encourage downsizing.
One potential solution would be to announce a new planning use class, which differentiates Later Living housing from both care homes and traditional residential. Views differ on whether this may be needed, but it could help offer investors greater certainty.
Of course, the benefits of an established Later Living sector wouldn’t be enjoyed just by investors, first-time buyers or families but the elderly themselves, who would get modern, purpose-built accommodation designed to suit their needs and lifestyles.
This should be a welcome change to the wellbeing of retirees, particularly considering the forecast £1 billion NHS bill that will be caused solely by inappropriate housing for people over the age of 55 by 2041. This stat from the Royal Institute of British Architects should be a reminder of the real purpose of Later Living: better health for our elderly, and more time to enjoy with friends, family, and community.
If you would like to hear more about the emergence of Later Living in the UK from some of the top thought-leaders in the industry, listen to our recent PropCast where Andrew Teacher from Blackstock Consulting is joined by Richard Jackson, MD & co-founder at Apache Capital Partners, Rory O’Hagan, director at Assael Architecture and Eugene Marchese, director of innovation & design at Guild Living. You can listen on iTunes, Spotify or SoundCloud.

Primark: A Lesson for the High Street?
Primark’s founder Arthur Ryan died at the age of 83 this month, but his stores will long outlive him. This is in stark contrast to its slightly more upmarket high street competitors like Topshop, part of Philip Green’s troubled Arcadia empire.
Britain’s traditional retailers have been under pressure for many years now. The rise of online shopping, with its convenience of buying at a click, is often said to be the main driver behind the high street’s woes.
Yet Primark, which doesn’t offer online shopping, is thriving. The retailer’s sales saw a 4 per cent increase in the 40 weeks up to 22 June, while its enormous Birmingham store, costing £70 million, opened in April.
Indeed, Primark has even turned its cheaper clothing into a desirable brand encapsulated by the hoards of people tweeting #Primani. It may be more expensive to dry-clean than to buy, as one customer tweeted, but it’s still runway-style fashion to be flaunted.
But the fact is that today’s consumer visiting the high street demands a whole physical experience that online just doesn’t offer. Primark is certainly tapping into this desire.
Between the Disney café for children inside the Birmingham store and the One with the Friends’ theme in the Manchester chain, millennial nostalgia must be having a field day. Primark’s Birmingham store even offer its visitors a nail bar, hair and beauty salon, and a barbers.
Sadly, Primark is proving so far an anomaly. Over 2018, the UK saw a net loss of 2,481 stores. That’s an awful lot of empty space to be taking advantage of in creative and inspired ways.
Mixed-use developments combining residential with retail and office space are a sensible way to do this. As well as the greater footfall for retailers through having residents and office workers right on the doorstep, a variety of asset classes means developments are more attractive for investors as they are not exposed to a weakened traditional retail sector.
Placemaking also has a vital role to play. We should be redesigning our high streets to create community and cultural hubs to draw in the crowds. For example, turning streets into pedestrian areas with market squares fosters sociability and community, bringing life back to areas that looked likely to be on the decline,
Expanding this approach across our cities and high streets could revitalise our cities to become prime destinations for tourists and locals seeking a fun day out. They might even do a little bit of shopping in between.
Feature image credit: Alex McGregor