ULI UK Residential Product Council Day - Ten go mad for housing in Cambridge
Recap of ULI UK Residential Product Council Day - 14 July
The ULI UK Residential Product Council met on the 20th of January. Their discussion was focussed on three topics: Affordable housing, single family rental and living concepts.
The session began with a presentation on Affordable Housing from Richard Cook, Group Director of Development and Sustainability at Clarion Housing. He began by setting out the UK government definition, stating “affordable housing is social rented, affordable rented and intermediate housing, provided to eligible households whose needs are not met by the market.” Eligibility is determined by local incomes and house prices, however, every local authority has a different eligibility methodology providing challenges. Currently, 3.8 million people are on the affordable housing waiting list and the most vulnerable individuals have an average waiting time of 2.7 years. This can be attributed to a decline in construction as 90,000 fewer affordable homes are being built each year than required.
For the affordable housing being delivered, there is an observed disconnect between housing needs and delivery. The need is for 2,3, and 4 bed properties but delivery is focused on 1 beds, which is leading to overcrowding. This could be overcome by earlier communication between developers and the affordable housing sector to facilitate greater understanding of the need.
Another area of disconnect is the design of affordable housing. Social rent and affordable rent homes are designed under different specifications due to the differing demographics of their occupants and the group’s discussion pointed to the fact that the affordable housing sector would like to be involved in influencing such design decisions at the outset in order to increase delivery value for developers. The better the design and operations, the better the asset value.
The second item covered was a presentation on single-family housing by Jennifer Murray, Head of Institutional Development at Homes England. A single-family home for rent is an independent residential structure that sits on its own land and is designed to be used as a single dwelling unit. Residents benefit from professional management, high levels of customer service and certainty of stable, long-term tenancies.
The industry sees great opportunity in built to rent single-family homes, partly driven by demographics. The private rented sector is often perceived to be comprised of those aged 25-35, however the English Household Survey confirms there is a substantial number in the 35-55 grouping who want a different type of housing.
2021 was a pioneering year for conversation around single-family homes as a raft of funders and operators set up new investment vehicles. However, the demographic requiring these homes is still underserved, providing opportunity for single-family rental to be used as a vehicle for developers to accelerate the building of large developments and create communities. However, construction of single-family homes comes with challenges. Most opportunities are in difficult green field, zero amenity locations. It is hoped that infrastructure loans and a generational shift will help developers to meet demand.
A community-oriented placemaking scheme presented by one housing provider demonstrated a situation where residents were living in a combination of single-family and build to rent homes. This approach was highlighted to be a good example to help accelerate communities, allowing other forms of housing to be developed around the centre successfully.
The session concluded with a presentation on living concepts by Adina David, Director of Urban Living at Greystar. This is a form of housing, known as co-living, is experiencing increasing demand. The definition of co-living is still evolving but is understood to be a form of communal or shared living where residents get a private studio or room in a home or building while enjoying shared amenities and common areas with other residents, under flexible lease terms. The demand for such housing is partly driven by societal change, including a tendency to remain single later into life.
Education surrounding living concepts is however greatly needed; the product is often perceived to be aimed strictly at students and young professionals and is seen to develop transient communities. It is important to shift such perceptions by highlighting how co-living can facilitate community building and have ESG benefits in order to make the product more integrational. Co-living can also be a useful tool for cities looking to retain skills and talent where people leaving university would usually look to move away and is a good tool to enable freeing up of family housing.
In terms of affordability, one provider in the sector shared how its smallest units target a middle-income earner and are competitively priced in line with a typical house share rent price at 30-35% of the target demographic’s salary. The discussion also touched on whether small living spaces would be an issue for renters but it was clarified that co-living spaces are designed so that the individual sleeps in the smaller unit but lives in the communal areas which include productivity, play and fitness spaces. Compared to a house share there is more space (12m2 vs 25m2) and a lot more amenity for a comparable rent.