An evening of drinks and canopes at Hilton's DoubleTree in Victoria, London, on the 19th April was followed by an extremely meaningful Asian House and Home Property Investors Seminar 2017 organised by the Asian Business Publications Limited, in association with Galliard Homes and Child & Child. The other collaborator was Sow and Reap.
Titled “Housing Shortage – A threat to the Economy” the evening was a cutting-edge presentation by key members of the industry who were able to disseminate information from a strategic perspective on what's going on at the ground level.
The panelists were David Galman of Galliard Homes, Zach Reynolds of Child & Child and Chris Whitehouse of Next Phase Development. The event was moderated by Suresh Vagjiani of Sow & Reap.
The programme started with L George CEO, ABPL Group's short and crisp opening address – introducing the panelists, sponsors, moderator and the Seminar Topic to the audience. CB Patel, Publisher/ Editor of ABPL Group made a short humorous speech to open the floor to discussions. “Whenever we talk of property, it is always smiling all the way, if you know some simple words of caution and carefulness.... we do a lot of events but a panel discussion is the first of its kind.” He thanked Sow and Reap for their decade-long association with the group at various levels.
The magazine was formally launched at the event, before opening the floor to debates. Topics discussed ranged from the chronic shortage in housing supply in London and how this can be dealt in a holistic and practical manner to policies and possible creative solutions.
Affordability in London
David Galman of Galliard Homes opened the floor with an impactful Overview. “UK's population in 2017 is approximately 65.5 million. The government's projected housing supply for 2015-2020 will provide 300,000 homes per year, which will support 55% of the population. Currently, the government's projections are 2-3 times greater than the current rate of building.”
What are the reasons for this? According to David's presentation, we need to be developing more in the brownfield sites mainly located from Midlands to the North of the UK but most demand is in the South East. What can be done? We have to target “permitted development that allows for micro-units that are cheap to buy and easier to rent; as a result dispense planning.”
Habits amongst the young are changing, flat-sharing and micro-living are becoming a popular stop-gap, with University continuing to live this way even after they start working.
Help to Buy – the government is now locked into this and continues to assist funding for young people as they get on the ladder. “We've found it incredibly useful in certain developments in certain areas,” said David. “All our properties have a Help to Buy option and we are lobbying to increase the timeframe from booking in six months prior to the end of the development.”
Zack said that young professionals, young families and low income families are impacted by the rising housing prices. “The ratio of the median house price to the median income in Greater London has risen from 4 in 1997 to 10 on 2014. it is a rise of 160%. According to National Housing Federation, rent in the UK are double that of similar properties in the rest of Europe... Land tax, for instance. The evidence is that it reduces household mobility in an area where there is restricted market, that also impacts the affordability issue.”
Chris said he would look at what can be done to resolve the problem. “Its the case of the inflexible within the marketplace, taking advantage of opportunities elsewhere and try urban regeneration in other areas. Other areas will continue to grow and prosper.”
Developing properties is politically charged and planning extremely complicated. “Policies should try to seduce a developer rather than coerce them, to ride with the market rather than block it,” summarised Suresh.
Overseas buyers causing housing problems?
There was a debunking of the overseas buyers myth across the panel. It is an 'urban myth' said David. “You cannot start a development project unless you've got round about 50% pre-sold – so you had to go overseas. Reality is, in the last few years UK has made up to about 75% of the purchases in London.”
Zach believed there has been an increase in overseas buying since 2007, while Chris said that its a myth perpetuated by a lack of understanding of the issue. Its simply a case of poor governance, poor support for developers and enough opportunities not being brought to the table.
Suresh clarified that a lot of foreign buyers are foreign nationals working in London are also branded as overseas buyers, even though they are based in London. The foreign investors who invest cater to the 'buy-to-let' side of the market which needs to be expanded.
Section 106
Chris said the original point was to try and spread the liability of development contribution in a fair manner across the board. The problem is when you add too structures and parameters, it becomes rigid.
Developers point of view is quite difficult. The government's stand can cause delays in handing over stock to private investors.
Suresh said that according to a survey in 2015, 95% thought delivering 2000 homes in 2016 was unachievable. The council demanded 50% of one site. We need to come up with a standardised 106 contribution. We have 32 boroughs each with their own perception of how much section 106 should be implemented and this is causing a real problem for developers. The Home Building Federation says while there has been improvement in the planning system, they are far too slow, bureaucratic and expensive.
Should the Planning process be de-politicised?
Its far too politicised according to Chris. A vast majority of local authorities are made up poorly experienced officers on short-term contracts not motivated to support anything. The actual decision makers have never been powerful.
David said that their company has an in-house architectural department looking after planning and design and sometimes case officers are on holidays for six weeks and no one is there to pick up the baton. It's way too politicised and privatisation is needed but will probably not happen.
Suresh said in 2017 The Housing Forum launched the 10 point plan where the first point says that Housing should be depoliticised by creating cross party housing groups and removing elected representatives from the decision-making process on some planning applications.
Tapping the green belt
Is the Green Belt a sacred cow? The green belt comprises 4 million acres, with only 9% of the UK currently built on 1% - 2% of green belt “rings around cities” could deliver 1 million homes. Chris said “green belts were built on the premise to avoid urban sprawl and avoid towns and cities merging into one another. But in the 1970s onwards, local authorities started taking advantage of the designation of green belts and integrated land that was never meant to be in the green belt in the first place. What we have it something shy of 78% of the country designated as green belt.”
David said it needs to be protected, but there are pockets that needs to be released. There aren't enough brownfield land and there will be a lack on available land on which to build.
Zach commented that green belt seems to be the logic to find land to build houses, “but if I am watching my green belt disappear out of my back window I don't know if I would see it the same way.”
Suresh summarised that there's 75 hectares of green belt within the M25. Even if a quarter of the this is released for housing supply- it will release a million homes that would solve our housing problems for the next 20 years. This artificially increases prices and leads to commuter towns.
Addressing minimum size of apartments in London?
Absolutely. London spacial standards are again overtly-restrictive. This comes from setting rigid parameters that don't take into consideration material circumstances of the site. Whilst you should have a set of reasonable guidelines, there should be flexibility will be really welcome in the marketplace.
Suresh said this is a blockage and reducing the supply, specially in Central London. Original idea was to avoid slum, closet-driven housing. But if there are responsible developers producing high-end housing stock there's no reason why that stock cannot be decreased.
There was an active Q&A session following this and it all discussed the barriers from a planning and developers perspective. The discussions continued even after the end of the seminar – with audiences and participants networking and discussing issues concerning them way after the seminar was over. Audiences found this extremely informative and successful event, and on their request ABPL plans to conduct similar events in the near future.
