We respond to some of the debate yesterday's blog stirred up.

Winston Churchill once said: “Those who fail to learn from history are condemned to repeat it.”

Covid-19 is an opportunity to bring UK housebuilding into the 21st century.

Attention may be aimed elsewhere at the moment, but understanding new Labour leader Keir Starmer is vital for the housing industry.

A PropCast with Mary-Anne Bowring of Ringley Group and Sebastian O'Kelly of the Leasehold Partnership

Blackstock Consulting's clients' share their analysis of what the new budget means for the property industry.

To solve the housing crisis, the property industry must start speaking and engaging more effectively with more people than it currently does.

A whole generation has been failed by the UK’s ongoing housing crisis. What will the next "solution" be?

With Christmas just around the corner, many of us will be looking forward to spending time with family, friends and loved ones. Unfortunately, not everyone is so lucky.

Brexit has been a big distraction that has taken the focus off other pressing domestic issues. What needs to change?

A man dressed as a broccoli arrested on the streets of London and people glueing themselves to tube trains before getting a good shoeing in Canning Town can only mean that the Extinction Rebellion are back in town.

The merits of these protests can be debated endlessly.

But it is becoming increasingly accepted by both business and politicians that climate change must be taken seriously.

Clearly, property must play its part given that the built environment is responsible for roughly 40 percent of the UK’s total carbon footprint, according to the UK Green Building Council.

However, while property may often be maligned for being an old fashioned club of chaps in blue suits, real estate is increasingly becoming aware of its responsibility as an industry to implement changes to tackle climate change.

In September, 23 property companies with a total of over £300bn of assets under management signed up to a climate change commitment, launched by the Better Buildings Partnership, requiring them to pledge that their portfolios will be net zero carbon by 2050, and that they reveal how they intend to reach that target.

 There are business reasons for investors and developers to look towards backing green projects. One, it reduces the risk of being exposed to stranded assets as the UK and global economy shifts towards this being the norm.

And, two, increasing numbers of investors are making it clear they will not put their money into vehicles that back projects that are harmful to our environment. This is becoming more than just a fashion for a small minority. It’s a clear and swelling trend.

Less polluting buildings, whether homes or offices or factories, will improve our air. Recent studies have shown that air pollution is killing as many Brits as smoking does a year. And of course, these pollutants in the air exacerbate conditions like asthma, adding stress to our already under pressure NHS with research showing 1,000 London hospital admissions a year due to asthma and other lung conditions caused by poor air, for example.

The benefits of a greener built environment are not just restricted to our health. More efficient homes will cut household bills, which in turn will increase their spending capacity. That’s good news for our economy.

But it’s not only in new builds where we need to see a push for green. Many of our older buildings are gas guzzlers, and an immediate and sensible step the government could take would be to eradicate VAT charges on refurbishment, much like the French have.

This would encourage investment appetite for refurbishment and help us start to fully decarbonise our building stock.

Design must also play its part.

Leading voices in the architectural world have acknowledged this fact, with Assael Architecture becoming the UK’s first practice to adopt the UN’s Climate Neutral Now Initiative. Through the initiative, Assael must now calculate and disclose its current carbon footprint, including international air travel, showing a clear pathway to reducing it year-on-year.

Architecture can also be a powerful tool towards building a sustainable future. Through the use of natural materials like timber and cork, as well as the use of greenery in developments, new buildings can absorb much of the greenhouse gasses that we produce, radically reducing our emissions and helping us to live healthier lives. Greener architecture has also proved itself to be a future proof investment, with green homes becoming quite the status symbol.

It’s clear that the property industry has in fact made a number of significant strides in the right direction. We have the means and motivation to transform the built environment in the UK and the way it operates, but now has to be the time to seize this opportunity.

Yes tax is boring, but it’s important too, and despite what you may think it’s extremely important for the Build to Rent sector.

While we may be banging the drum on separate use classes or affordable housing methodology, perhaps we should turn more attention to how VAT is applied on homes for rent.

Homes sold on the open market are ‘zero rated’ and so pay no VAT. But If I rent you the flat, because it is an investment, I have to charge you VAT at 20% on the rent.

But you are not going to pay that, so I would have to make it VAT exempt, meaning I am unable to claim back my own VAT charges.

Given the majority of BTR developers are building new homes – rather than digesting those built for sale as buy-to-let investors do – Build to Rent investors should be treated differently, as far as VAT is concerned.

You can offset it through capital gains, but you cannot avoid it and it is a needless drag and a disincentive that may reduce likely investment into the sector.

As I said – it may not set the front pages alight or be the top recommendation of any white paper, but it’s important none the less.

One of the biggest advantages yet biggest barriers of Build to Rent (BTR) is that developers and operators take the long-term view.

They don’t build and walk away, like a traditional house builder, and as a result there are a lot more happy tenants, and happy local authorities.

But this structure has a massive impact on business practice and it’s a lot more expensive up front. While other investors look to trade at different stages of the asset’s life cycle, a BTR fund aims to hold for long-term income.

That means, from day one, income needs to maximised and costs streamlined, because it’s so much more expensive to build.

Traditionally, to make returns stack up, operators have had to take on development risk, which has in turn led to problems around finance. Typically banks will only lend on permitted schemes and are increasingly being discouraged from risk by regulators. Likewise many institutions will only touch stabilised assets.

But buoyed by the fundamentals of the market and by the positive political support, the signs are more positive right now.

And appropriate explanation, planning and development of that long-term development model can also go a long way to encouraging lenders: essentially by showing a greater focus on what happens post development.

This means, practically, ensuring the scheme is in the right location and has the right attributes for the rental market. It also means focusing on the operator is and what the gross-to-net margins look like. There will be considerations around amenity and layout, but also the building materials used and their longevity.

It also means more focus on the assumptions of development: assumed rents and how they compare to the local market average, and gross to net leakage, which is generally considered to be at least 30% – are the most important.

For management, it means seeing if a sinking fund has already been set up, to ensure buildings remain as good as they are on day one, and how the operation of the building has been planned, whether with an in house or external agent.

The more a developer operator can show it has been thinking about this now, and importantly making realistic assumptions, the easier it will be for a lender to stump up the cash.

It’s a long-term investment, which means we should already have long term plans. Simple, no?

Until recently pension funds had been unable to enter the Build to Rent (BTR) market.

By their nature they look for secure, long-term returns and tend to favour low-volatile, less-risky opportunities compared with private investors.

This is the principal reason why they have not been able to compete with buy-to-let investors, who have been able to take on personal risk and leverage themselves often past 90%.

Pension funds cannot leverage and therefore any fund manager would struggle to make the returns. This, coupled with a tightly regulated sector has made the private rented sector a challenging sub-sector to place money.

But over recent years, traditional institutional investments such as sovereign bonds have hit record lows and there has been a growing trend of institutions increasing their exposures to real estate. Within the property divisions of the major institutions, there has been a growth in the desire to allocate to so-called alternative assets, such as Build to Rent.

This charge has been led in a large part from abroad and huge chunks of money are now supporting the sector, particularly from North America, where the asset class, known as multifamily, is mature and well understood.

A look at the Canadian Pension Plan Board’s arrangement with Lendlease or Oxford Properties deal with Delancey shows the levels of investment that North American investors think UK BTR justifies.

Not so long ago, Build to Rent’s estimated return of an average 4% net yield would have been considered too low for some investors. Less so now.

The major benefits are reduced volatility relative to other sectors and the obvious imbalance between supply and demand. Whereas other investments are driven by how the economy is fairing, people will always need a place to live.

It means this type of investment is less affected by the macro-economic environment that other asset classes are more tightly linked to.

As with any type of property investment, there will be hurdles to overcome, but they are less than the advantages.

And Although Britain is decades behind North America – which boasts a sizeable listed multifamily sector – there is every opportunity for such a shift to occur here as institutions seek to find a new home for their funds.

It’s a sad fact that beautiful buildings are not always the best performing, especially when we are looking at Build to Rent (BTR).

While design is important in attracting customers we should build from the operational side first, and then add design in later. This is how they build in the multifamily housing sector in the United States.

For build to rent the practicality of how a building runs defines whether a building will ‘stack up’ from an investment point of view.

While we should be excited about the role BTR can play in shifting people’s perceptions of renting, as far as driving yield is concerned, it’s the little things that will make the biggest difference.

The more practical it is, the less spent on maintenance. That lowers costs and increases customer satisfaction.

Small but significant operational costs will add up and make a big impact.

For example, square skirting boards are dust traps. But if you install smooth edges they do not trap dust, so cleaning time and thus cost is reduced.

The same can apply to light bulbs. Spending more on a longer-lasting bulb, which reduces replacement costs and wear-and-tear, adds up to a huge difference across a portfolio of properties.

Hundreds of incremental changes like that means your capital outlay over a period of time is less.

In the USA, they build from an operational view first, and then add the design in. For example, some hotels in the States use oil-based paint for the corridors that has a dotty pattern. So if a wall gets scuffed, instead of having to repaint the entire wall, they just have to touch the affected area up.

It is called ‘life cycle costing’.

The other side of operations is branding.

You only have to look at the market place developing in the Build to Rent sector to see that it will be highly competitive in years to come.

Hence why we need to start to start developing brands and setting out uniform standards now that will govern developments and operations.

People like brands because they are benchmarks. If you buy a Mercedes or stay in a Hilton Hotel, you know what you’re getting. This is especially important as we’re moving into a sector like the PRS that has traditionally been associated with low standards and poor service.

Design is great – who doesn’t love a beautiful building? But so should a building be a pleasure to live in and dream to operate. It’s not a case of one or the other.