Housing is seen to be one of the key drivers to support the economic recovery. Berwick Partners were delighted to host a series of quarterly Development Online Forums where we discussed, amongst others, the topic of the new Affordable Homes programmes and the challenges and opportunities that will come with it.
In light of the Coronavirus pandemic, the attendees debated how the design of new homes could meet the ever-changing demand of the way we all work and live, as well as discussing how we could future proof the construction process and embrace MMC, as Tom Neely, Housing practice lead at Berwick Partners, explains.
Affordable Homes Programme
The announcement of the 2021-26 Affordable Homes Programme (AHP) to build up to 180,000 new homes was largely well received by the delegates. With the critical need for decent affordable homes, the funding programme that includes money for social rent was welcomed. There was, however, no detail on the grant rates on offer in the different regions of the country or how many social rented homes will be supported through the programme.
There was disappointment amongst delegates around the changes across shared ownership, given it had been such a popular and successful product over the years. There is no doubt that this will increase demand to an already popular product and widen the market. However, from a business perspective, it is uncertain as to how this will affect business plans moving forward. Notwithstanding the changes in staircasing, which will reduce profitability, the uncertainty lies around the 10-year maintenance guarantee and how this will sit in the business plans.
From a financial perspective, one delegate suggested that, given the changes implemented, they may need an extra £30,000 in grant per unit to make them viable to develop. Another delegate, however, commented that they see this as an opportunity to make their repairs service more efficient and to ensure that the purchaser and Housing Association understands what their obligations are.
Design of new homes and communities
All participants agreed that our future homes will need to provide purpose-built home-office spaces, where we have access to good-quality natural light throughout the day if possible, with easy access to Wi-Fi. For this to happen Housing Associations have to operate more like Housebuilders to gain control. More Associations need to a set design house standards and work towards more of a land-led strategy than a traditional reliance to S106. Given the uncertainties of S106 in its current guise and around the planning white paper, this will give Associations more control to develop with modern methods of construction (MMC) and to drive overall efficiencies.
From a placemaking perspective, organisations will need to rethink development models and incorporate commercial spaces in buildings or within a walk or cycle ride from most homes. It is vital that planners and development teams work together to ensure ‘amenity space’ is being truly utilised on each site. One delegate mentioned that new communities with more local social infrastructure such as shops will need to be prioritised, as working from home means we’ll probably make these trips more regularly.
Future proofing the construction process and embracing MMC
With the AHP setting the target that 25% of homes need to be delivered by using MMC, Directors agreed that it is a lot harder than just setting a target. Net zero carbon by 2050 is achievable, for instance, but is also incredibly expensive. It is vital that organisations are looking at fabric first before investing huge sums of capital into expensive technology.
In addition to the Net Zero Carbon challenge, many spoke about the difficulty with lenders given the MMC 60-year warranty and their reluctance to partner with the Associations at scale. There can also be issues with planners when discussing MMC.
There is currently a lot going on in the sector around modular and it remains an attractive proposition for a rental product and can be a solution to our homelessness crisis across the county. From a sales perspective, however, we are in an immature market where both lenders and buyers want to see brick. We need the volume to change this perception, but we also can’t change this without the volume.
From an organisational perspective, senior teams are needing to be innovative and curious to seek new ways of working. Given the volume of new technologies and MMC being brought into the marketplace, that skillset also must be matched with the intellectual agility to understand what innovation will work for their organisations. Associations are also looking for leaders to have strong external networks to provide the possibility of collaboration and strategic partnership, particularly given the cost implications with MMC and Carbon Technology.