It’s interesting to compare and contrast two conferences which ran one day after another recently.
On Tuesday 23 October, the Living UK Conference took place at the Oval Cricket Ground, London. On Wednesday 24 October Homes for Scotland’s annual conference was held in Our Dynamic Earth, Edinburgh.
Both conferences spoke to challenges involved in the delivery of housing supply (or lack thereof).
In London, there was an emphasis on regulatory challenges having an impact on scheme viability. Particularly, the mandatory requirement for new residential developments which are 18 metres or taller to incorporate dual stair cores from September 2026 is challenging financial viability by increasing build costs and sellable floor space.
In Edinburgh, the standout regulatory issue continues to be the implementation of NPF4 – and the timing involved in planning consents. Màiri McAllan MSP, the Cabinet Secretary for Housing, who was the keynote speaker, promised that she would be making use of her powers to intervene in the planning process where required to unlock development.
Another theme in London linked to viability was the rise (literally) of multi-tenure developments, incorporating a mix of BTR, affordable, co-living and student accommodation all within a single scheme. The view from speakers, and delegates in the room, was that a comprehensive mix of tenures was increasingly required to deliver a financially viable development proposition which was future-proofed against fluctuating market demand. One of the challenges of this approach is the requirement for planning authorities to recognise the need for a degree of flexibility in terms of consents granted.
In Edinburgh, the Cabinet Secretary was strong on emphasising the Scottish Government’s focus on driving forward all-tenure delivery. Her comments didn’t necessarily envisage all-tenure delivery on every site, but she did re-emphasise the new all-tenure delivery ambition to increase delivery across all sectors by at least 10% each year over the next three years.
Mixed tenure delivery – build for sale and a % of social or mid-market rent housing - is already a common feature of much of Scottish housebuilding, given the now ubiquitous requirement for affordable housing delivery on all sites imposed by planning agreements, but perhaps there is something that could be repurposed from the English experience of all tenure delivery to Scottish housing development, specifically with an eye on improving financial viability by aligning different investments and unlocking large scale delivery?
In London, much of the focus was on the delivery of private investor led Build to Rent (“BTR”) schemes.
As has been extensively commented on, BTR investment in Scotland has been stalled in recent years by uncertainty created by the Housing (Scotland) Bill – although it is now hopefully on the path to being restarted by the Scottish Government’s welcome exclusion of BTR, mid-market rent and purpose built student accommodation from rent controls in the final Bill which was passed by Scottish Parliament last week.
It was interesting to hear that in England, BTR investment is often challenging – the investment landscape is highly competitive on an international scale, and other markets with different regulatory requirements may prove more attractive when propositions are compared side-by-side.
That’s not to say though, that there is no investment activity in the space. It was notable that one investor spoke to the attractive opportunity which exists to acquire existing stock for improvement and refurbishment and re-market as affordable (“small A”) housing. This approach offering lower risk returns on investment, with fewer regulatory requirements (particularly in terms of building regulations) is attractive.
It struck me in Edinburgh, that the positive focus and energy on delivering the all-tenure 10% annual increase didn’t reference the challenge of dealing with the condition of existing housing stock. According to Scottish House Condition Survey: 2023 Key Findings:
“Disrepair to critical elements, which are central to weather-tightness, structural stability and preventing deterioration of the property, stood at 45% in 2023”.
Managing stock condition is a significant issue facing Registered Social Landlords, which can act as a barrier to the delivery of new supply.
Could there be an opportunity for investors keen to invest in existing stock in the UK to come together with RSLs to support the required investment in existing stock to allow RSLs to focus on the delivery of new supply?
It was an interesting couple of days. Although the conferences had slightly different focuses, and were broadly catering to different audiences, there were some stand-out overlaps and opportunities to the cities to learn from each other.
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Legal Director
