New London Quarterly Editor David Taylor writes up the LREF 2019 Roundtable on the alternatives sector.
Historically, different corners of the alternatives sector have operated in ‘silos’ – with student housing, co-living and retirement living all attracting considerable investment over recent years. With continuing pressures to diversify to manage risk, find returns in a tough investment landscape and a social responsibility to deliver more housing of all tenures and types, are we now about to see a blurring of the lines? Will we increasingly see combined concepts, both as part of a wider development masterplan or perhaps under the same roof? What needs to change to bring this flexibility to the market? This roundtable brought together key stakeholders to understand the future for these investments.
The key points and selected quotes under Chatham House Rules from this roundtable held at LREF included the following:
- Developers need to understand how people now live and work
- But definitions of ‘alternatives’ feed into a background where the home ownership model is the prime, default one. A lot of people are renting for longer – so it makes sense to make the rental experience a better one
- ‘I would welcome a drive to eliminate the “alternative” part of that definition because I think that doesn’t help integrate it into the mainstream, as it should be’
- Government ministers should talk more openly about this sector, rather than on home ownership (where they appear to feel votes lie)
- Affordability issues and demographic demand are the key elements driving the sector, and creating subsectors of Build to Rent
- Millennials often prefer the concept of co-living rather than the ‘stigma’ of affordable housing – or living with Mum and Dad
- The underlying concepts behind housing – that there is a ladder and continual progression given different life changes – no longer always holds
- The wrong type of housing can be a significant barrier to the economic health of areas
- Alternatives are responding to the market rather than forcing people to adapt to ‘whacky ideas’
- The operational models that need to operate an extra care facility or student housing are different to build to rent and there are few operators with the scale required. ‘I think that’s a big obstacle to convergence’
- Build to rent cannot drive the same values as private sale
- More flexibility in a traditional, fairly rigid, planning system could be a particular help to catch up with the market and allow for innovation
- Data on the occupation of existing housing could also better inform planning decisions, including on co-living
- The number of retirement units delivered across the UK is way behind demographic changes
- Student housing has been successful in the regions largely because of its efficient use of land. Increasingly, though, local authorities are saying they have enough student housing because those students ‘go home’ and add little to local economies. Could those properties be allowed to operate more fully?
- Development financing is a challenge in convergence; ‘institutional appetite’ another
- ‘The biggest need is that communication and strong narrative recognises the conventional housing model, but also that there are other needs and priorities as well. Conveying that in a really coherent way to local borough politicians – planning committee members in particular – who seem to think if you’ve provided conventional housing, somehow all the bases are covered. So many people will be left out of that, who have different sorts of housing needs, at different times in their lives’