Are we building the right types of homes?

There is a debate that rumbles. Apartments or houses? Is it a personal choice or one put upon us. There has been substantial investment by institutions into apartments but houses still dominate our residential needs. Over 75% of the UK population live in a house. A national survey highlighted that over 90% wanted to live in a house. Houses however are typically owned or fall into the affordable category managed and owned by a housing association. Is it time that investors invest in PRS houses??

The UK still is not delivering on units. The target of 300,000 is still a dream. The Government continues to stimulate home ownership rather than rental through schemes like Help to Buy and the Mortgage Guarantee Scheme. There is a wider affordability crisis that means people may not be able to afford a new home or simply may not want to.?

The contrast between the UK and Europe is quite stark. In the EU 46% of the population live in apartments. In fact only Ireland and Norway have less apartment dwellers than the UK. The UK has the most people living in attached homes (i.e semi-detached, terraced etc). And is it surprising when 78% of homes in 2019 were newly built homes - and I can’t imagine that percentage has changed much. So much dependency on the national housebuilders to supply our housing needs.?

A pandemic hit in 2020 and changed the behaviors of many. In a post-pandemic world there could now be an opportunity for investors to look at single family homes - providing residential units that are better suited to the world we now find ourselves in. A full response to changes in society and how we use the place where we live. Build to rent (BTR) has grown in recent years but has been centered on urban locations. This makes sense due to the demand and where the target cohort lives. BTR should now be able to look beyond the urban confines and broaden its offer.?

The key change is working from home. Putting aside the home schooling at has largely been positive highlighting to many that they are able to fully fulfill their role from the comfort of their homes. This is particularly acute in knowledge workers. Commuting times have often been a driver for housing locations. People didn’t want a long commute and therefore with employment came a radius of housing options. The last two years have reduced commuting journeys for many and with that increased a tolerance for longer commutes - “if it only happens once or twice a week I’m happy to travel further”. The radius for where we select our homes from has increased. There are more options.?

Another big change is the population. The BTR journey for many is now advanced and things have changed. They may now have a family and need more space. There is a need for flexible space both inside and outside and a need for a community to feel part of. There are key areas for investors to consider:?

• Design: The design standards of SFH will need to adapt to two key drivers: climate change and wellbeing standards. These two combined will have a great impact on the future designs. Increasing the number of sub-urban BTR will give more focus for technology enabled and climate resilient family houses. Digitisation of construction and increased MMC will help towards sustainability and ESG goals. The role in technology in future homes cannot be underestimated. Good technology helps drive better wellbeing. Wiredscore is widely recognised and is moving into BTR. A consistent standard across all BTR will drive high standards of technology as a given.
• ESG: ESG is rightly the top of many public and corporate agendas. Our residential needs are firmly ripe for ESG focus - both from the customers who use to the investors who fund. There is a balance to get. The UK is marching towards net-zero carbon by 2050 (and substantial reductions before 2030 of carbon emissions). The activities associated with construction account for a large proportion and therefore focus is needed here. There has been good progress with regulation but more will need to be done to maintain the momentum or risk the wrath of the two key stakeholders of customers and investors.?
• MMC: There is looking to be (hopefully eventually) a rise in mainstream use of MMC usage amongst housebuilders. The use of MMC will help achieve the delivery of zero carbon homes which can be built in factories with set specifications and tolerances. The use of MMC lends itself well to the development of single family homes on a large scale - the ability to deliver at speed and standardisation really promotes quality and consistency.?

The last two years have changed how many of us use our homes. Individuals will be spending less time in a corporate office and working from home more frequently, but those homes were not made for working in. The new behaviors we have mean that our residential needs need to evolve and those constructing them need to reflect on what may actually be required. The new patterns of where we perform our work will create a despurcement of where residential dwellings are needed - is large scale residential apartments in city centre locations still a good option??

So are we building the right homes? The answer is yes. The problem is maybe who the owner is. We live in a world where people want “on-demand” and therefore home ownership is not the only answer and as the next generation age they will decide if they want to remain in rented or move to ownership.?