In June, we made our annual trip to Manchester for the CIH conference. For me, it meant a short burst up the M56 in the car from home rather than the weekly 6:03am from Crewe into London.

I like the CIH at Manchester. It’s a chance to reconnect with our Northern roots, check out the changing face of the city (and its latest watering holes), as well as the chance to mix with those RPs and contractors located outside of London with wider regional programmes.

It was a reminder that those organisations are committed as ever with significant appetite to deliver affordable housing in what are challenging times for the sector. With a backdrop of increasing build costs, competition for land and dissipating supply, it also reaffirms the importance of land-led development to many RPs to assist with that delivery.

Indeed, of the 1,055 units currently live/on site being delivered through V10, over 700 are outside of London.

Unlocking the land

As a company we have always been fortunate to have an ongoing supply of land, formed through longstanding relationships with landowners, promoters and developers.

That said, in these times of a restricted number of consents coming through the planning system, V10 successfully acquired a site ‘on market’ in late November last year with Stonewater for 87 units in Huntingdonshire for a 100% affordable scheme. This is a path we continue to be successful with, competing in the market partnering with RP’s to acquire sites for development.

There is over 60 years of collective expertise in buying land and delivering a fully designed scheme tailored to specific requirements in the team!

Like all development companies, land remains the lifeblood of our business and we continue to invest great time, energy and resource into identifying potential land opportunities that are suitable for delivery into the affordable housing sector.

Build Cost & Viability

We work with some great contracting partners, who are established in the sector with whom we have forged close relationships with over time. This has never been so important to us as a business.

With cost inflation being experienced by all in the sector, we work hard with our contractors to understand the sites that we assess and put forward, identifying the key risk items and identifying their solutions at an early stage of engagement with an RP.

Working transparently to demonstrate the best route to tackle ground conditions and abnormal costs, the effect of planning and section 106 to programme and getting the site delivered.

We undertake extensive sales research with data and the qualitative research from local agents and housebuilders to assess the market dynamics local to the scheme, and the affect that might have on the absorption of different tenures.

By doing all of this we aim to assist our RP to assess the site quickly and enable us to move swiftly on schemes that have potential.

You can’t beat Face to Face

As I noted from one senior RP development director, the importance of meeting friends and colleagues was perfectly demonstrated at this year’s CIH conference.

“Zoom and Teams have their new place in our lives but sharing a story and a smile (maybe a coffee or something stronger) in person cannot be replaced.”

That is how relationships are formed, and through collaboration and partnering, they will continue to be the key to enabling the delivery of much needed affordable housing in these uncertain times.

If you would like to find out more about V10 and how we partner with housing associations to deliver land and build package deals, please get in touch.

Written by Simon Kight, Acquisitions and Partnerships Director, V10 Homes

Could the year 2022 be 2006 or even 1991 for those of us old enough to remember those times?

Both 2006 and 1991 represented peaks of activity in the UK housing market. However, both points were followed by an economic recession, high unemployment and a resultant crash in both property and land values. Is this about to happen again?

What will happen to housing demand?

Rising energy and food cost inflation and the expected hike in mortgage rates are all factors that will inevitably lead to a very gradual reduction in demand for outright sale housing in the medium term.

However, it will not stop the need for affordable housing which in fact will increase in these difficult circumstances for low-income households. Nevertheless, the real trigger for a true correction in the housing and land market will only come if mass unemployment rears its ugly head again as it did in 1992 and 2010.

Given the economic response to COVID, and in a pre-election period, it is highly unlikely that the government will allow this to occur. So, our assessment is that by historical standards, demand for homes will remain elevated. It may well be that currently there are twenty buyers chasing one home in some parts, but even if this drops by 50% to ten buyers market demand will remain hot.

The planning system and other factors

Recently developers have been grappling with two significant constraints. Firstly, on the supply-side the planning system is simply not delivering consented sites at the rate required.

The will to fix the system in the short term seems to have dissipated after the departure of Robert Jenrick and the arrival of Michael Gove as Secretary of State for Housing, Communities and Local Government.

Our expectation is that the planning system will limp on for the next few years unreformed with the steady supply of sites continuing to be an issue for developers. Secondly, on the cost side global supply chains for materials will still take some time to rectify themselves so cost rises will continue. Equally, labour costs in the UK with wage inflation now taking off will ensure that this cost component part equally continues to rise for the next couple of years at least.

So overall, for-profit developers selling outright sale homes and not-for-profit Registered Providers selling shared ownership products can all be confident, especially in the south of England, that demand will hold up very well. House prices should continue to rise, albeit at a   reduced pace.

What does this mean for registered providers?

For-profit developers will be faced with rising build costs, some or most of which will be offset by rising house prices due to elevated demand.

However, to extract profit developers will need to buy and develop out consented sites and thus compete for a limited supply of land on and off market. To defend their business plan aspirations, and even some of their profitability, developers are likely to continue to pay heavily for land over the next two to five years.

Unless Registered Providers relax their KPIs and accept higher cost to value ratios or longer repayment periods then they are likely to miss their development targets by 2026 due to them being less competitive in the land market.

So, will galloping land values abate in 2023? Well, they will certainly not drop back to a trot but they may reduce to a very fast canter – so the answer is no.

Written by Karl Timberlake, Land & Operations Director, V10 Homes