Matt Carroll, Director of Property at Altair shares his thoughts on the possible opportunities for the affordable housing market post-Brexit.
Whilst a lot of uncertainty surrounds Brexit, there may, however, be opportunities for the housing sector. We reflect on three possible areas.
Developers liquidating private sale assets?
If Brexit leads to a short term decreased demand for private sale homes, we are likely to see developers and house builders selling their new build and off-plan private homes possibly at discounted rates to capitalise on these assets and reduce the sales risk.
During the 2008 Financial Crisis, we saw developers selling discounted private homes en masse to housing associations. Recently builders have sought out housing associations to sell private sale stock at a 15% discount. Once again, there is an opportunity for affordable housing providers to maintain supply and to increase the numbers of affordable homes by purchasing private sale homes and converting to affordable provision with government grants. Could this become a quick way for affordable housing providers to help deliver the million homes target?
A good excuse to bridge the skills gap?
It is widely accepted that we already have a skills shortage and ageing workforce in the construction sector.
A large portion of labour on housing developments schemes is made up of EU citizens. In order to deliver on the increasing demand for affordable homes, in the face of expected stricter immigration policy, it will be necessary to plug the UK skills gap. Will Brexit create more urgency for us to re-prioritise the skills shortage? Is this the opportune moment for housing associations, developers & builders to collaborate and drive forward community-based housing to develop skills sets in the sector? Has the time now come for the sector to review graduate and apprenticeship schemes to make them more appealing to attract greater talent?
We believe that more upfront investment into graduate and apprenticeship schemes will lead to long term gains, helping us to attract a variety of people, bringing a wider diversity of thought within our sector. We need to recruit individuals that will challenge the norm, help us to innovate and operate efficiently. This could be the start of a culture change towards the sector fully adopting the best technologies and modern methods of construction such as BIM, hybrid techniques to combine panellised & volumetric approaches and data sharing platforms.
Future investor & partnership opportunities?
Finally, a declining private sales housing market could threaten the viability of associations’ viability as traditionally sale homes help cross subsidise affordable home provision. We may need to change the way we look at land to create new opportunities to ensure viability. Is there a gap in the market for more mixed-use schemes with commercial units?
With a weakening British pound, investing in property may become more attractive to overseas property investors. With foreign investment being actively discouraged in residential properties via increasing stamp duty land tax rates, interest has spiked into commercial property. Could private sale homes be replaced with private sector investment in commercial property to help cross subsidise affordable homes?
With more funds possibly available to invest in infrastructure schemes, this may help unlock land which may have been deemed desirable or viable for housing. There could be opportunities for affordable housing providers to team up with infrastructure agencies such as TfL or Network Rail to deliver joint schemes or acquire cheap land in areas where infrastructure investment is targeted for the future.
Similar to the Global Financial Crisis, organisations have a choice, do they freeze, sink or flourish.
If organisations can identify early on and capitalise on the opportunities which Brexit may create, they are likely to come out on top, stronger and more resilient than before.