Opportunities for Innovation: the UK Housing Landscape

As the Stamp Duty Land Tax holiday fades into distant memory and stamp duty rates and everyday life return to “normal”, where are the opportunities for investors, developers and homeowners in the current UK housing market?

Low interest rates & 95 % Mortgages

Competitive finance remains a strong opening.
While interest rates remain low, finance is available at good rates. It provide existing home-owners and investors with the opportunity to re-mortgage, getting better deals and freeing-up cash to pump into other acquisitions, smarten up existing homes or invest elsewhere.
Coupled with 95% loan-to-value mortgages available on the high street, the current financing options may make it a good time for first-time buyers to step onto the property ladder.

Pick your Own: Help to Build

For the more creative and ambitious house-seeker, the government’s Help to Build scheme aims to make building your own personalised house more accessible and affordable through offering low deposits and simplifying the process.
Help to Build plans to make smaller sites of little interest to large-scale developers available to the public with general planning permission and services already in place. It aims to incentivise local authorities to increase availability of these serviced plots and to benefit small to medium-sized enterprises and specialist builders who are able to turn purchasers’ dreams into reality.
In April 2021 the Government committed an initial £150 million over 4 years to its Help to Build scheme, but whether Help to Build will contribute to sustaining the housing market is debatable as arguably its chance of success will lie not so much with the finances but with its ability to capture the British public’s imagination and change its traditional mentality.

Relinquish or Re-purpose? City centre conversions

Lasting effects of Boris’s “work-from-home” (WFH”) lockdown policy are also being seen in the commercial and housing markets. As permanent employment contracts with WFH and flexi-time provisions are becoming normal, conversely proximity to the office is becoming less important to workers.
This is reflected in the housing market by the increased demand for more space at home and outdoors, increased desirability of regions outside the traditional commuter-belt and areas offering more to life, such as Cornwall, seeing some of the highest interest in years.
Whilst employers explore hot-desking in a bid to reduce office space and economise on rent, businesses with an entrepreneurial flare are capitalising on empty space by re-purposing their portfolio.
John Lewis, for example, is aiming to create 10,000 new homes by building on store car parks, above Waitrose supermarkets or next to distribution centres. The homes, ranging from studio flats to houses will be furnished from its stores.
Rather than selling up fast, creative landlords, investors and developers may wish to consider if re-purposing city-centre commercial properties for residential use would give better returns in the post-COVID climate.

First Homes: affordable housing direct from developer

Finally, the middleman in social housing is being cut out by the government’s First Homes scheme; developers are now closer to providing affordable housing direct to the public.
Since the summer local planning authorities have been obliged to ensure that local and neighbourhood plans stipulate that First Homes constitute at least 25% of all new affordable housing units secured through developer contributions.
Under the scheme ‘First Homes’ are dwellings which are sold:
• With a minimum of 30% discount off their open market value,
• At a first sale price of no more than £250,000 (£420,000 in Greater London) after the discount has been applied, and
• To a purchaser who fulfils the qualifying criteria, which will include having a household income less than £80,000 (£90,000 in greater London).
Restrictions on subsequent sales will apply to ensure that First Homes are not bought and sold purely for profit and investors will be deterred by checks that purchasers are not able to provide more than 50% the deposit at purchase.
The scheme’s requirements will impact developers, especially in the planning stages, as they will have to ensure that enough dwellings are ear-marked as First Homes and that their finances are sustainable enough to cover the extra time taken to sell First Homes individually rather than in bulk to registered social housing providers.

Whether any of these schemes will provide enough buoyancy to sustain an already flying housing market remains to be seen but what is certain is that opportunities remain for those innovative enough to take it.