A new approach to speed up UK housing delivery
Housing was THE big finish to the Autumn Budget, demonstrating the importance placed on the sector. The government wants to deliver 300,000 additional homes by mid-2020, announcing a number of carrots and sticks designed to encourage developers to build out more quickly and boost land release; a marked contrast to the usual demand-side measures which mainly serve to push prices up.
The housing shortage crisis remains one of the biggest threats to the future of the UK’s economy as well as our societal cohesion through intergenerational inequality. There is no panacea to the housing crisis and as such the traditional housebuilder Build to Sell model cannot meet this target alone. To tackle this, we need a new approach. That is why Legal & General is applying a unique multi-tenure strategy in order to speed up housing delivery and significantly reduce completion timescales. This means using our long term capital and housing capabilities across all tenures, delivering Build to Sell housing alongside Build to Rent, later living, student accommodation and affordable housing in order to create thriving, sustainable communities. In addition we are revolutionising construction methods and creating additional housing capacity through our modular factory in Leeds.
Today we exchanged contracts to acquire a 272-acre site in Arborfield, Berkshire. With planning for 1500 new homes, this site epitomises how Legal & General’s wider multi-tenure capability enables us to appraise complex development opportunities as a one stop shop, with the aim to deliver homes of all types and tenures in up to half the time period. Legal & General Homes will now continue to work collaboratively with the other parts of Legal & General’s housing business to bring forward a mixed tenure site.
This approach is very different to many of our competitors who could not viably take on a site the size of Arborfield in its entirety or would seek third party capital to do so. Most sites of this scale would be split up and shared amongst a number of housebuilders, all delivering a similar product for the same target market. This often results in delays to delivery as well as cannibalisation of sales, and can mean that the site ends up feeling disjointed. While the residential sales market is notoriously cyclical, with traditional housebuilders responding by turning on and off the tap, a multi tenure strategy helps to diversify risk, due to the range of routes to market and different demographics of potential purchasers, allowing delivery to progress throughout.
We believe that adapting a multi-tenure approach could help tackle the UK housing crisis. Our strategy allows us to regenerate large scale sites in a cohesive, holistic way, ensuring that we are creating long term, diverse, vibrant communities with high quality public spaces and central facilities, where people want to live. And ultimately, given the fact the number of homes built has been falling short of demand for decades our diversified tenure and demographic strategy means we can increase the speed of delivery for these homes, benefitting those in housing need as well as the wider economy and society in general.
James Lidgate, CEO of Legal & General Homes