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The State of the Region - The Housing Forum Topical Debate for the North West

07 January 2009 | Darren James

The latest Housing Forum panel debate was held at the Cube Building, Manchester and discussed the rapidly changing housing climate. A panel of cross-industry experts debated the legacy of the current economic turbulence and predicted consequences for the housing industry from the North West perspective. The guest chair was Ian Perry, Chief Executive of the Harvest Housing Group.

Panel Debate from The Housing Forum North West Regional Conference

The panel was drawn up from regional industry experts. These included:

Louise Fletcher-Chard, Associate, EC Harris
Sue Lock, Chief Executive, Wulvern Housing
Peter Quinn, Head of Business Development, Lovell Partnerships
Katie Saunders, Partner, Trowers and Hamlins

Guest chair Ian Perry kicked off the session by citing his current concerns for the region. The North West is used to cycles in the housing market and had oversupply 10 years ago. Nevertheless, the region has some fragile housing markets, even in times of 'boom' which will make challenges harder. Some leading RSLs are based in the area who have a history of collaboration through procurement and development partnerships. These are well positioned to act as Strategic Housing Associations to support the HCA's drive in the region. The North West needs to prepare for continuing 'Rent to Buy' schemes.

Is there demand for flexible tenure?

Sue Lock led the topic of flexible tenures. She commented that there is massive demand for housing but developers can't sell their stock due to restrictions on mortgages. People are still finding homes unaffordable despite the recent drop in prices. Intermediate rent is very important and Wulvern Housing are keen to get mixed tenure and mixed income schemes to work. Sue considered that we need to listen to our customers who want flexibility and good quality homes that they can rent, buy and rent again in later life. This would help ride out fluctuations in the market. The recent boom was driven by cheap mortgages which we won't see again for a long time.

DIscussion from the audience raised the following points:

The issue of needing a massive deposit at present (25-30% plus arrangement fee) and suggested that we need to develop schemes which take this into account.
Wulvern is looking into providing mortgages which might push out to 35 years mortgages.
Most people aspire to own their own home. 80% want to own their own homes but only 70% currently do. To make renting a more attractive option we must provide good quality to change aspirations, which will take a long time.
Flexible tenure would need high grant rates to make it work.

Can collaborative partnerships survive the current downturn?

Katie Saunders guided the discussion on difficult trading times and the affect on partnering agreements. Has the current climate signalled the death of partnering and long term relationships? Some might say that the sceptics of partnering have long been waiting for this to happen. There is the argument that partnering doesn't work through difficult financial periods and it is every man for himself as companies become much more introverted. However, lower price does not always equal good value for money. This can result in poor quality and disputes in the long term. Other options may be to try to get the best value out of existing collaborations by looking at supply chains and enhancing buying power.

The audience discussion included comments that partnering is the way forward to improve value and keep costs down, removing the need to return to the old days. It took a long time to establish partnering as the norm and would be a disaster to loose the good relationships that have been formed. The industry has seen some partnerships falling away in the last 6 months. Partnerships speed up delivery in a slow moving sector and can be much more flexible in the current turbulent climate.

Will the housing industry look different in 5 years time?

Our third speaker, Peter Quinn, considered the future of the housing industry when the downturn ends. He acknowledges that the current situation is unique. RSLs are in as much of a state of shock as everyone else. Peter predicted that the in the near future we would see leaner private sector companies which will be more risk orientated. They will also become more consumer orientated as there will be less work out in the market. It is imperative that the private sector responds to these market changes in order to survive.

We will probably not see a massive structural change in the market but we might see a greater degree of collaboration as partners try to get best value out of their suppliers. There will be a more realistic 'Green' agenda to take into account the financial viability of such schemes. The private sector is still key in regenerating communities. We may see efficient, good quality green homes where whole life costings are taken into account.

Audience discussion included:

A suggestion from the floor was that Local Authorities are in a strong position to invest in infrastructure through funding streams from the government. Some LAs are now seizing the moment but don't have the skills or expertise for regeneration projects and don't form genuine partnerships. There needs to be a fairer stake in the final project.
'Are the private sector building homes for sale or homes for rent? Is there any long term management?' Housing management is a skill that is difficult to manage. There is no role for developers to go into long term management due to lack of skill and long term view. Housing Associations are much better placed for this.
The Housing Forum Kitemark is a good mechanism for providing long term management regardless of who the developer is.

Is the cost of regulation too much of a burden?

The session was rounded off by Louise Fletcher-Chard leading on regulation. We work in a fast changing market and the existing model isn't going to work in the current situation. We continually need to push for increasing quality and sustainability. The large cost burden is an issue in times when budgets are tight. The current policy is based on increasing land value which is no longer happening. In relation to the Code for Sustainable Homes, the technology isn't cheap enough for us to strive for Level 5-6. This is still very much a pipe dream. Regulation is beneficial but it doesn't tackle the existing stock portfolio. Louise reminded us of the fact that 70% of all buildings in 2050 are already standing today. Regulations don't go far enough. Aspiration drives new builds and this isn't going to happen in the current market. We need to help to develop the technology which will in turn make it a cheaper option than currently and so therefore a more viable option when the market recovers. Due to land prices, timings for level 5-6 housing might even be pushed back until 2016. There is a need for clear policy and funding to take decent homes to the next level.

A challenging comment from the floor suggested that the limited funds available should be used to build new homes to satisfy demand, not to upgrade existing stock. Louise argued that very little is coming through in terms of new build and we need a policy change on existing stock. Carbon emissions are far higher in existing homes and so we should tackle that problem first.
A delegate commented that most Housing Associations have their own standards which are above the regulation requirements but with longer timescales. These cannot be realised without further grant aid from the Government.
Consumer demand should be considered. It was expressed that consumers would be willing to pay for more efficient homes if they know they will get value back in terms of cheaper fuel bills.

Guest Chair, Ian Perry rounded off this lively session with the following points -

There is enthusiasm about how we can make flexible tenures work successfully.
Are we interested in steady long term relationships with our partners? We need to be flexible and talk to our partners to get best value.
The recession is a time to stand back and work on relationships in time for the expected surge in demand when the downturn ends.
Existing stock is a big issue, how can we deal with it and how can it be paid for?
Level 5-6 Housing is likely to be pushed back until it is economically viable to press ahead with more sustainable housing.

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