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2018 set to be ‘landmark year’ for Build to Rent

A new generation of Build to Rent (BTR) developers creating homes aimed at the modern tenant could help solve the housing crisis in coming years, industry experts have said.

While purpose-built blocks of rental homes are common in other countries such as the US, Germany and France, they are a relatively new phenomenon in Britain.

But recently, the sector has begun to expand across England, with 80,855 homes either completed or planned, according to recent official figures.

And as the buy-to-let business continues to be hit with tax and regulatory changes, shrewd investors are likely to consider Build to Rent developments to create tomorrow’s housing communities.

Last year, the government’s housing white paper proposed changes to the National Planning Policy Framework 2012 (NPPF) so local authorities actively plan for BTR where there is an identified need.

It also recommended making it easier for BTR developers to offer affordable homes and to enable the creation of family-friendly tenancies of three or more years.

Because owning rental homes is a good way for pension funds to get steady, reliable income to pay their pensioners, a growing number are keen to invest.

Legal and General, for example, the giant pensions and insurance company, has earmarked over £1 billion to invest in BTR.

In the US, as well as many European countries this way of renting is much more widespread.

In the Netherlands and Switzerland, institutions have nearly half their property investments in residential, whereas it’s just 1 per cent in the UK, according to a 2010 survey by data provider IPD.

The UK has seen seeing record breaking investment into the BTR sector with the total capital committed reaching £2.4 billion for the first time last year – a 22 per cent increase, according to the latest report from real estate consultants CBRE.

BTR land sales also significantly increased during 2017 with a clear shift away from prime to fringe locations, the report also shows.

The substantial growth in investment has been attributed to a considerable increase in volume capital seeking Build to Rent investment, particularly from US investors who are familiar with the model from their domestic market.

In 2017, some 41 per cent of investment came from investors in the US and Canada,

Significant BTR deals included Grainger agreeing three deals for a total of £86 million in Sheffield, Manchester and Birmingham.

Additional investment from Legal & General meant that Birmingham alone secured £81 million worth in investment during the fourth quarter.

One of the landmark London deals of 2017 was CPPIB’s £250 million investment in to Lendlease’s Elephant & Castle project.

Source: Simple Landlords Insurance

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New homes agreed for Charmouth by casting vote

Two new homes at Charmouth which some objectors claim would be damaging to an Area of Outstanding Natural Beauty have been approved – on a casting vote.

The contemporary homes, which between them will provide seven bedrooms, are double the size of the previous building, Cove Cottage.

Objectors claimed the development would be ‘overbearing and overpowering’ – but the applicants insist their scheme will add, rather than detract, from the area and will be of a similar size and scale to other homes in Higher Sea Lane.

Alison Dudgeon, who is making the application with her husband, told the West Dorset planning committee that despite the 21 letters of objection she was sure people would see how the architect had worked hard to make the new homes fit into the area. The couple are planning to move to the area from Hampshire.

She said the new design has reduced the bulk of a previous plan and had been set back into the landscape – compared to Cove Cottage which, she said, “sat on a plinth.”

“These are two interesting and well-designed dwellings which will be an asset to the village,” she said.

In its objection, Charmouth Parish Council claimed: “One original dwelling is being replaced with two dwellings creating narrow plots which would appear harmfully discordant with the surrounding properties…the height and bulk of the structure from the south east is imposing upon the AONB and would have an adverse effect on the amenities in the area.”

It also said the design would mean neighbouring properties, The Beach House and The Moorings, would be overlooked.

Cllr Cheryl Reynolds, who represents the area on the district council, said there would be “a significant detrimental impact on the neighbours” if the proposal was allowed.

She added: “I would have expected any replacement home to be of a similar size and scale.”

Only one councillor, Robin Legg, spoke in favour, even though he said he also had reservations about the size of the property.

He said: “I quite like the idea of something new. We do struggle to advance to the stage of not building what is already there; we ought to build some things which are relevant to the twenty first century.”

Amongst the letters of objections were concerns about encroaching on the South West Coast Path, the design and materials chosen, insufficient parking and the buildings extending to the boundary.

Resident Jill Swindell said a previous application had been turned down with the council’s rejection being supported on appeal.

She said the reasons then included the size and scale of the building, the effect on neighbours and the AoNB:

She said: “The conclusions must be that these still apply, even more so now the site appears more open following the demolition of Cove Cottage.”

Jane Morrow, from The Moorings, told councillors that the building were ‘”incongruous with neighbouring properties and over-bearing.

“There will be a solid mass of wall and roof which will have a significant impact on our property.”

With the committee evenly split on the vote, committee chairman Cllr Fred Horsington used his casting vote to approve the application.

Source: WessexFM

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Build-to-rent: the saviour of UK housing?

Predicting a shortfall of 1.8million rental homes by 2025, the Royal Institute of Chartered Surveyors (RICS), announced last year that the UK was on the verge of a rental crisis. The reasons they gave for their dire – but not unexpected – prediction was inevitably the obvious shortage of housing, but they were also quite clear that a major factor was the increased tax burden on landlords and the new Stamp Duty tax on second homes both of which are discouraging further investment in the private rented sector.

The solution to this crisis, RICS insisted, had to be ‘a much bolder and long-term approach.’  Their answer it, appears is Build-to-rent, an approach that has worked on the continent for years (at least France and Germany). In Britain it certainly appears set to revolutionising the industry. We are seeing a steady growth of institutional investors building purpose built facilities for students and we are seeing property developers who would traditionally renovate existing buildings into rental properties turn their attention to new build.

Creating purpose-built rental homes isn’t a new idea for the UK though; the government’s Build-to-rent Fund was created in 2012 with the intention of increasing the number of high quality homes for market rent within the private sector.

The Olympic East Village in Stratford is a great example. Replaced with the Home Building Fund and managed by the Home and Communities Agency, the original Build-to-rent initiative seems to have gone from strength to strength. Recent figures from the Agency point to the fact that around 80,855 homes built specifically for rent under the scheme have been completed or are currently in development.

London leads the charge with Build-to-rent homes

London, with its over-inflated rental market, has been the beneficiary of a number of high-profile Build-to-rent schemes. The largest to date is in Wembley Park in Brent (one of London’s poorest boroughs). But others are planned; a major scheme being in the former Bourbon Biscuits factory in Bermondsey where 11 blocks of homes are planned – some as high as 25 storeys.

There is also a great deal of thought going into tenant needs in these areas with many of the units being let with a 25% discount against market value and are being offered with options for longer term 3 year tenancies with all bills included. Such approaches are often a result of partnership working with the local authority who will help and support the right type developments for their area.

What about the smaller investors?

This type of approach isn’t just reserved for large scale developers and institutional investors. Many smaller investors all around the country have been taking advantage of ‘Permitted development rights’ by converting to commercial buildings into small residential holdings, often of 6 – 10 flats or less. The next logical step for these investors is new build and the appetite is building to acquire small plots of land in order to do small build to let developments.

There will be more Build-to-rent schemes, throughout the UK, thanks to a proposed change in planning rules which will give local authorities the right to offer sites for similar serviced Build to Rent developments. Many within the property industry believe that can only be a good thing by improving standards in the sector as a whole and represents a great opportunity for Landlords and Investors in the private rented sector.

Source: Simple Landlords Insurance

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Labour pledge to build one million affordable homes to end housing ‘crisis’

The rise in homelessness shows there is something “deeply wrong with our country”, Jeremy Corbyn said as he set out Labour plans to build a million “genuinely affordable” properties over 10 years.

The Labour leader promised a “new era of social housing” and a return to a system where a decent home is “not a privilege for the few”.

The plan involves building 100,000 affordable homes a year – with Labour promising to tear up Conservative rules which allow homes worth up to £450,000 to be classed as affordable.

Launching a consultation on Labour’s plans at an event in London, Mr Corbyn said it was a “time of crisis for our housing system”.

“A million on housing waiting lists, tens of thousands of children in temporary accommodation without a home to call their own, homelessness up by 50% since 2010, the indignity of sleeping on our streets at night or sofa-surfing among friends,” he said.

There were “sky high” rents and house prices, and “luxury flats proliferating across our big cities while social housing is starved of investment”.

He said that housing had “become a means of speculation for the wealthy few”.

On the plight of homeless people, he said: “There is something that I think is deeply wrong with our country that we tolerate the idea that several thousand of our citizens should sleep rough on our streets every night, or if a church is open they will sleep on church pews.

“We can, must and will do better than that in the future.”

He promised a Labour government would “immediately purchase enough places so that rough sleeping can end as quickly as we can possibly do it”, while also building more housing and move-on accommodation for people leaving shelters.

As part of the reforms to the housing market, Labour would create a new English Land Sovereign Trust – backed by compulsory purchase powers – to make land available for building more cheaply.

Under the scheme, landowners would lose a slice of the extra value created by the granting of planning permission, which can see the price of agricultural land rocket 100-fold from £21,000 to £2.1 million a hectare outside London.

Labour always make big promises and always fail to deliver them

Housing Minister Dominic Raab

In response to the Grenfell Tower tragedy, Labour would introduce new decent homes targets for social landlords, including fire safety for the first time. And a new independent national organisation and a Commissioner would be created to represent the views of tenants.

Local authorities in every part of England would face a “duty to deliver affordable homes”.

The policies would be driven through by a new Department for Housing and monitored by an independent watchdog.

Labour accused Conservatives of making “bogus” claims on affordable house-building on their watch, by stretching the definition to include properties for sale at up to £450,000 or rented at 80% of market value – more than £1,500 a month in some areas.

A new definition would be linked to local incomes to ensure homes are genuinely affordable. And Labour will suspend the “right to buy” scheme as part of a package of measures to stop the loss of existing social rented homes.

Housing Minister Dominic Raab dismissed the plans, saying: “Labour always make big promises and always fail to deliver them.”

He claimed that Labour would “kick away the housing ladder from everyone living in council houses by taking away their Right to Buy, just as Labour did in Wales”.


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Danny Belton: Housing associations could replace the Help to Buy scheme

Help to Buy could be replaced with institutions or housing associations launching similar schemes, Danny Belton, head of lender relationships at Legal and General Mortgage Club, has suggested.

Help to Buy is currently set to end in 2020 and the government has yet to announce an extension.

Belton said: “Help to Buy has been tremendously well received. It’s added value but it’s difficult to say whether it should it should stay.

“Anything could happen. If the government stops it, we may see other institutions, or people wanting to invest in the financial market, try and put something in that space.

“And Help to Buy is different in England, Wales and Scotland so maybe housing associations could do something different for their regions. I assume the Government are weighing it up and making a decision. We’ve got a bit of time.

“The bigger issue is helping those customers remortgage from Help to Buy.

“The problem is we’re now five years down the track from when customers first took Help to Buy so now they will have to start paying interest to the government on the part they own.

“There’s limited options available to those customers and we need more. We need more lender support and education for the brokers so they can help.”

Belton suggested one solution could be new build and stressed how important it is for Legal and General.

He said: “We’ve actually enabled more lenders to come to the market with strong propositions that have the right offer time and take into account builder incentives and offer right LTVs on both houses and flats.

“We as a country are in need of more houses. The volume of properties owned outright is now greater than the number of properties with mortgages on them. The only way to change it is to build more houses.

“The government has set their own targets for new build. We won 100% of Cala Homes and we have our own factory in Sheffield for modular housing.

“It’s an important topic for us and the country. It’s all very well building all these houses but you need the lending for them too.”

He argued the two areas seeing the most growth are later life lending and specialist lending, including second charge.

Later life involves equity release and helping older borrowers that still fit the traditional mortgage continue with their interest-only type deals. And by specialist sector, he meant second charge deals and consumers with complex incomes.

He said: “Later life is a growing market, partly because of products improving, the older generation being fitter and stronger and having a desire to keep working and people realising you can use equity release for many different reasons such as home improvements.”

Belton thought second charge deals can be great for customers and brokers are just becoming more aware of them.

He said: “Second charge deals offer really good solutions for a number of customers. I see that market growing a bit but I see specialist lending in general growing.

“A lot of it is awareness and they’ve catered for this complex income environment as well as those with credit issues in the past.

“Ultimately there are certain customers such as serial debt consolidators that actually shouldn’t but there are a lot of people that just had other circumstances.

“These lenders have recognised that opportunity and awareness and have a good criteria, service and competitive rates, pretty close to high street rates.”

“In today’s market with a flat transaction levels, the view is we need to be more holistic advice and we place those deals with the right lenders. It’s a change in mindset more than anything else.”

Belton predicted Legal and General growing its volumes and adding more lenders to its panel.

Belton said: “We’re seeing the product transfer growing as well. In 2017, there was £25bn worth of product transfers being written by intermediaries and this year that could double to £50bn. A lot is down to how brokers use that market.”

Source: Mortgage Introducer

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Shropshire New Homes Exhibition to take place this weekend

The Shropshire New Homes Exhibition is the place to be for those looking to buy, rent or let in 2018!

The biggest homes event in Shropshire this year, exhibitors from across the Country are preparing for a busy weekend as the 14th and 15th April draws closer.

Hosted at Shrewsbury Town Football Club (Montgomery Waters Meadow), this free event is expected to draw those looking to buy, rent or let in Shropshire from across the West Midlands and beyond.

Experiencing a new-build boom, the choice of housing in Shropshire is immense. Although a large choice is a positive thing, it can also make the process around finding a new home all the more complex.

Specifically devised to pull together all of the necessary services, consultants, developers builders, suppliers and professionals and placing them under one roof for a weekend, the Shropshire New Homes Exhibition has been developed with the home-buyer or home-browser in mind.

Providing and quick and easy way for people to access the information that they need to make their move a much simpler one, Judy Bourne, Director at Monks Estate and Lettings Agent and driving force behind the Exhibition’s development expands:

“The 2018 Exhibition is going to be the best one yet and we urge all those looking to move to or relocate within Shropshire to attend, as there really isn’t a better opportunity to see what is happening and planned for the County in terms of new homes.

Getting you ahead of the game when it comes to purchasing a new build home, we have an array of the County’s premier developers at the Expo, who will be showing off their latest plans, allowing Exhibition visitors an exclusive insight and the opportunity to see and potentially choose new homes before they are even built.

“Furthermore, there is no other place that will allow you to meet and speak with the complete spectrum of legal and financial experts required as part of a home purchase, at your leisure.

There for the whole weekend, we have a long list of professional consultants there ready to help people along on their home buying journey.

As well as the ‘Professional Sector’, the 2018 Exhibition also includes a ‘Home Making’ area that focuses specifically on all of the other essential services and products that make a new house a home.

Judy continues: “Due to the excellent response that we had from the 2017 Exhibition, this year’s event is set to be considerably bigger, better and busier! Exhibitor numbers are the highest that we have ever had, and we have been sure to include representation from all the extra elements that people require when moving to a new home.

Showcasing a wide array of services including interior designers, removals firms, alarm systems, kitchen and bathroom designers, carpet suppliers and technology for the home, we are excited to see the response that we get from event visitors.”

“A hub for Shropshire’s new homes market, visitors to the Exhibition will have access to a wide range of exhibitors and will benefit from the knowledge and expertise that they will be able to provide.

A fantastic home information and buying event, we expect a lot of business to be kick-started on the day, due simply to having the right people in the right place at the right time.”

The 2018 Shropshire’s New Homes Exhibition is a FREE two-day event that will be hosted at Shrewsbury Town Football Ground, Montgomery Waters Meadows, Shrewsbury on Saturday 14th and Sunday 15th April 11.00 – 4.00pm. Entry is free.

Source: Shropshire Live

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Help to Buy scheme extended to help 4,000 on to property ladder

A scheme to help people buy a new-build home is to be extended for a further two years.

The Scottish Government is to invest an additional £100 million in its Help to Buy programme from April 2019.

The extension will assist up to 4,000 people looking to purchase a property without the need for a large deposit.

Since its launch in 2013 more than 12,000 households have benefited from the scheme, the government said. Housing Minister Kevin Stewart said it had also supported around 9,000 jobs. He said: “A third of the annual £50 million budget – £18m – will be reserved for sales from SME builders, who were particularly affected by the drop in development finance after the financial crisis.

“We know house builders still see Scotland as a place to continue to develop and invest, with the latest figures showing new house completions grew by 5 per cent over the last year. “Housing is about more than bricks and mortar – we want to provide safe, warm homes, help create a fairer Scotland, and preserve a diverse and more resilient construction sector.”

Nicola Barclay, chief executive of the home building industry body Homes for Scotland, welcomed the announcement.

She said: “It clearly demonstrates that the Scottish Government supports the aspiration of home ownership and recognises the real challenge that continues to face prospective buyers in terms of the size of deposit they require to achieve this goal.

“This additional funding will provide our member companies with the certainty they need to invest in and open up new sites and expand the number of homes available to new purchasers.

Crucially, just as the scheme’s extension will ensure even more people can buy a home, it will also ease pressure in other parts of the housing market.”

Source: Scotsman

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UK Local Government Association calls for new build fibre to the premises kitemark

The UK’s Local Government Association (LGA) has called for housing developers to adopt council proposals for a fibre to the premises (FTTP) kitemark for new build homes to make it clear to prospective buyers what they can from the internet connection in their new property.

Developers currently only have an obligation to connect water and electricity before a property is sold. And, said the LGA, while the government’s new draft of the National Planning Policy Framework aims to help councils encourage developers to provide FTTP connections to existing and new developments, it does not give them powers to hold developers to account. The association believes that introducing a new FTTP kitemark is a common-sense proposal that will make it clear to the public whether or not their new home will have a fully future-proofed internet connection.

Cllr Mark Hawthorne, chairman of the LGA’s people and places board, said: ‘The standard of digital connectivity we provide to our new build homes should reflect our national ambition to roll out world-class digital infrastructure across the country. Residents will no longer tolerate digital connectivity taking a backseat in developers’ plans.

‘We call on the government, homebuilders and the broadband industry to work with us and develop the details of this proposal and give homebuyers the confidence to invest in a new home, knowing they won’t be stuck in the digital slow lane.’

Mark Collins, director strategy and policy at CityFibre has responded to the announcement. He said: ‘Access to high-quality internet access is of enormous importance to UK residents, with around one in three admitting that it has become as important to them as electricity, gas and water, and a quarter going as far as saying that they couldn’t function without it.

‘We also know that having access to next generation internet access delivered over full fibre infrastructure can add significant value to property – a figure that’s been calculated to be worth at least £7 billion nationally over the next 15 years.

‘Full fibre is the only infrastructure capable of delivering the reliable gigabit speed services and futureproofed capacity the UK needs. We fully support the LGA’s call for the launch of a FTTP kitemark, which will give full fibre – the gold standard in internet connectivity – the status and recognition it deserves.

‘Consumers have been misled for decades by advertising practices which allow copper-based broadband products to be advertised as ‘fibre’. The introduction of a kitemark, however, will help consumers know what they are paying for and what standard they should expect.

‘By improving awareness and increasing demand for that gold standard, consumers, government, local authorities and industry can collaboratively drive the roll-out of full fibre across the UK, helping it to catch up with the rest of the world.

‘Ultimately, this isn’t just about residential broadband speeds, this is about driving real and meaningful economic growth in all parts of the country for the long term. The FTTH Council in the USA, has calculated that providing full fibre to just half of all premises in any given location could result in a 1.1 per cent rise in annual GDP. This figure applied to our own research based on 100 UK town and city economies, suggests an economic impact in excess of £120 billion. This is a figure that cannot be ignored.’

Fibre has been high on the agenda for the UK government, with the 2018 Spring statement revealing the first wave of allocated funding under its Local Full Fibre Network (LFFN) scheme, which will provide more than £95 million for 13 areas across the UK (see UK government allocates £95 million for 13 local full-fibre broadband projects in first wave of funding).

Source: Fibre Systems

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Developers putting a new emphasis on more affordable new homes in London

The development landscape in London has changed in the last two years with some areas having the potential for residential property prices to outperform the wider housing market, according to new research.

They include areas such as Mayfair, King’s Cross, Earl’s Court and Farringdon in central London, as well as Camden, Shoreditch and Hackney, along with the Royal Docks, West Ham and Leyton.

The analysis from real estate firm Knight Frank looks specifically at the potential performance of new homes in these areas and takes into account transport and infrastructure impact on prices between now and 2021.

Since the firm’s previous development hotspot report published in 2015, there have been a number of changes triggered by political and economic policies with planning in particular seeing significant changes following the election of current London Mayor Sadiq Khan.

The new development hotspots report features a wider geographical spread than previous reports. In terms of values, the majority are localities where new build developments are priced at under £800 per square foot and most are also outside zone 1. This emphasises the changing landscape for development in London, with a greater focus on affordability, the report says.

One of the biggest impacts is likely to come with the opening of the Queen Elizabeth Line (Crossrail). ‘In many cases the opening of the high speed rail link from the end of next year has already been priced into sales values in and around station hubs, although for stations where large scale development is still in the pipeline, pricing could reflect this in the future,’ the report explains.

‘The changing dynamics of the London market in the last two years have also had an impact on the performance of some of our 2015 hotspots. Some of these areas have not seen the growth in pricing over the timeframe forecast, but are still seen as areas of opportunity,’ said James Keegan of Knight Frank’s residential development consultancy.

‘The financial demands of undertaking large urban renewal projects are material and it is essential that it is recognised by all parties that pump priming prices is a necessity, not only to ensure financial viability but also to encourage developers, through profit, to commit to these projects,’ he explained.

‘Given the current conditions, particular attention and emphasis is needed to ensure the built environment is of the highest quality. In particular we believe many schemes need to over stretch the upfront cashflow to deliver exemplar product set into a high quality realm. Where successful, the rewards will follow,’ he pointed out.

‘However, it is important that these are not seen just as super profit, instead they should be considered in the context of each scheme’s long-term heritage and environmental contribution,’ he added.

Among the locations highlighted is Earl’s Court where prices currently at £1.650 per square meter are forecast to rise to £2,100 by 2021 while in Camden prices are projected to rise from £1,100 to £1,500 over the same timescale.

East London has a number of areas where prices growth is set to be strong. The report forecasts that in the Royal Docks prices are set to rise from £800 per square foot to £1,000, in West Ham from £700 to £950 and in Leyton from £675 to £800.

The report points out that the net supply of new housing London rose to 39,560 in 2016/2017, compared to the 66,000 new homes a year needed in the capital and this imbalance looks set to continue.

‘There are a number of areas of the capital where large scale development projects are currently taking place, many of which won’t be fully completed for a number of years. As demand continues to outstrip supply, these new neighbourhoods are expected to benefit and have the potential to outperform the wider market. However, the changing policy landscape could weigh on new supply in some areas,’ it concludes.

Source: Property Wire

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Around 400 new homes planned for former McEwan’s brewery

The site of a former McEwan’s brewery in Edinburgh is set to be turned into hundreds of new homes.

The city council intends to build around 400 homes on the nine-acre site in Fountainbridge.

The development near the newly-opened Boroughmuir High School will be ready by 2025, according to the council.

Housing convener Kate Campbell said: “Regeneration of Fountainbridge is hugely important for the city’s economy.

“At the heart of this development is our aim to ensure that prosperity and growth benefits everyone, in every neighbourhood.”

Brewer Scottish & Newcastle shut the 148-year-old Fountainbridge Brewery in 2004 and it was demolished seven years later.

Edinburgh City Council is seeking a partner to develop the site, which will include a mixture of social housing, homes for sale and housing association properties.

Source: STV