​​​​​​​Guest Blog: James Pargeter, Senior Advisor - Global Apartment Advisors

"In the Spring, I have counted 136 different kinds of weather 
inside of 24 hours." –  Mark Twain

Spring is a time for hope and renewal, but it can also be – as Mark Twain pointed out – a time of considerable uncertainty. In this context a sell-out crowd gathered at the latest Movers & Shakers event on 25 March, over breakfast at the Savoy, to explore one of the great dilemmas of our time – the ongoing ‘Big Housing Challenge’ of supply. How can we better manage the variables – whether economic, regulatory or political – and to what extent can the UK’s Rented Living sector play a bigger part in addressing this growing but inertia-laden problem?

In many ways we now have a better opportunity to tackle the challenge than at any time over recent years. The Government may still be finalising details of their approach, but they have explicitly recognised the scale of the problem and expressed determination to address it. The sector is relieved at such positive support, and mostly champing at the bit to get more built. 

Frustratingly, we also have a growing list of obstacles to actually getting on with the job. Some of these are global – both economic and geopolitical – and some are more national or even local. All of them were touched on by the stellar range of speakers gathered on the stage.

First up was Marcus Dixon from JLL to outline the current context. Opening with Donald Trump’s photo suggested this might be a bumpy ride. Marcus pointed to UK positives from falling debt costs, hopes for modest GDP growth, and inflation that is stabilising. Sensing nervousness in the room, he went on to focus on the housing market, and the rental sector in particular.

Rental growth is currently slowing towards ‘normalisation’ of between 3 – 4% over the next 5 years – with Build to Rent (BTR) having a slight edge over the wider private rental sector (PRS). The imbalance between supply and demand persists and, in the face of a 143% increase in the volume of private renters over the last 40 years, it seems extraordinary that it isn’t easier to cater for such obviously growing demand. Yet on balance PRS landlords (including Buy-to-Let) are more likely to reduce their stock rather than increase it.

Can Rented Living come to the rescue? It would certainly like to, but its construction pipeline is currently falling significantly – down 21% in the last year. Although BTR represents a healthy 15% of all housing completions, homes for sale and social housing are faring even worse and overall output is down. But ‘living assets’ still tend to be favoured by investors over other real estate sectors, and investment is forecast to rise into the future – with trading of stabilised assets alongside new development – and Single-Family providing significant diversification.

Tom Copley, London’s Deputy Mayor for Housing and Residential Development then gave an illuminating keynote. Despite current challenges, Tom retains his ‘glass half full’ approach in encouraging additional investment and construction to address London’s housing crisis – a top priority for our global city. Starkly setting out how this crisis affects the lives of most Londoners, he stated that Temporary Accommodation for homeless households is currently costing London’s local authorities £120m per month. Beyond this high financial cost, the consequent impacts on education, health and local economies are severe and acute. Fresh news of additional funding for social and affordable housing from Government is naturally welcome, and he expressed hope that this will continue to improve over coming months.

Primary priorities of the Mayor’s office are increases in social and affordable housing, but Tom was encouraging about the role he sees for BTR within London’s updated delivery target of more than 80,000 new homes per annum. He said that every lever should be used to support development and BTR has the potential to be an essential piece of the puzzle. This will be reflected in the new London Plan, currently being drafted.

In questions, Tom acknowledged the challenges posed by the current Building Safety environment, which is demonstrably slowing down delivery, and pledged to work with the sector to resolve issues wherever possible. He also responded to a question about mid-market housing provision by stating that BTR has a key role in enabling this – citing the good work recently between his team and the BPF on viability.

The panel session followed, excellently curated by Niki Kyriacou of NHBC. The theme of the ‘squeezed’ or ‘missing’ middle continued, although challenges around viability and understanding on this topic seem arguably harder. Across the BTR spectrum, the key problem is getting new homes built at all – a challenge bigger than simply adjusting the planning system.

On the impressive panel were Katherine Russell of John Lewis Partnership, Damien Sharkey of HUB, Cath Webster of Thriving Investments and Nik Dyer of Halcyon Development Partners. The wide-ranging discussion focused on a couple of main themes – how is Rental Living evolving as a spectrum of options, and how does BTR respond to what people want into the future?

It was good to hear the Rental Living sector being discussed as a continuous spectrum, rather than a series of niche segments. Co-living is emerging as a valuable addition to urban housing choices – positively addressing a need for ‘Studio BTR’ that can attract or retain talent in cities cost-effectively. Single-family housing is emerging strongly in suburban settings and beyond, and can adapt further into the future. Increasingly there are no hard dividing lines between BTR typologies and, with a growing inclination towards mixed-tenure, mixed-typology development, people’s accommodation choices can truly evolve along with their needs over time.

The other strong trend is towards Rental Living adapting to the needs of a wider range of customers than perhaps perceived to date. A broadening of the affordability envelope towards the ‘squeezed middle’ seemed agreed by the panel as a sensible and worthy objective. Whether achieved through simpler building designs, a shift away from the ‘arms race’ towards amenities that are actually used, a renewed focus on essential workers or simply by increasing delivery of additional homes, one message came through loud and clear. In the face of rising demand across the demographic range and the needs of local economies, Rental Living has the will and ideas to address this element of the market that has been too long taken for granted.

Delivery models that provide value and quality, modern accommodation at rent levels related to incomes rather than job type sounded promising, and reference to Thriving Investments activities in Manchester and Scotland were cited as examples of such an approach. Any strategy will need to work for Investors, Developers and Customers alike – ideally extending outside affordable housing definitions supported by public grant funding – whilst retaining the tenure-blind approach to intermediate affordable homes that has been so successful to date.

This isn’t straightforward of course, and considerable work with national and local government will be needed to improve understanding of both the level of need and a pragmatic approach that could deliver better renting options for more people. It was encouraging to see Tom Copley listening to the panel’s experiences of the current obstacles to additional delivery.

Questions from the audience raised a range of other issues hindering delivery. The Building Safety Act and the associated approval process was described as the single biggest obstacle to development at present. Without full clarity or appropriate resources, it is currently throwing huge uncertainty over designs, time, costs and funding, at a time when the sector really shouldn’t have to be crystal ball gazing.

The state of the construction workforce is another area that needs urgent improvement. NHBC drew attention to their current training initiatives and are actively looking for partners to help to scale this up for the good of the sector’s future.

The forthcoming Renters Rights Bill was raised, which will present additional challenges when it comes into force, including around a lack of minimum and fixed tenancy terms even where residents want them. Comparison was made with recent Scottish experience, where anecdotal evidence put off investment and delivery significantly.

The session drew to a close with a summing up of ideas on how BTR and the Rental Living sector can further help to address the housing needs in London and across the country. As well as addressing the challenges mentioned previously, there is a bigger picture of trust-building and improving understanding of the benefits to people and places that additional development of BTR communities can bring.

The irrepressible Darren Rodwell contributed that regeneration should bring benefits to the existing community, and be seen to do so, in order to achieve inclusive growth. Damien Sharkey was frank in saying that developers need to actually build what they say they will to secure planning consent – failing to do so damages trust for the entire sector. Opening up ground level amenities to the wider community can be helpful in building stronger communities.

Final thoughts on the new London Plan were positive, with hopes that it can incorporate suitable flexibility to be able to acknowledge the differences between different proposals and treat them on a genuinely case-by-case basis. Everyone wants to see more homes delivered, and for these to be better matched to local needs.

Another memorable Movers & Shakers Breakfast event had come to an end, and conversations continued around the room. As ever, the quality of the speakers, content and networking was excellent, and no-one could ever fault the Savoy’s catering. Attendees dispersed with fresh thoughts about how to contribute to the wider mission of the Rental Living sector. Levels of uncertainty continue to be of concern, but the need for more action to address the big housing challenge becomes ever more urgent.

Can 2025 can be a year of real progress? Nobody wants that to be the case more than the people aspiring to better housing choices into the future.

“In Winter, I plot and plan. In spring, I Move.”
Henry Rollins