COMMENT Embracing partnerships is not just a short-term fix for the current challenges facing the living sector, it’s a fundamental strategy to propel it forward.
Whether through risk sharing, joint developments or forward-funding agreements, the partnerships model is enabling thousands of new homes to be built across the UK.
For example, Sigma Capital announced plans in 2023 to deliver 865 new homes in partnership with Countryside Partnerships. The homes, located at 11 sites in the Midlands, South West and North will be marketed under Sigma’s build-to-rent brand, Simple Life.
“That’s the way we look at doing business. It is creating that partnership, relationship, that trust. And, hopefully that works both ways,” said Gwynn Thomson, investment director at Sigma Capital, when asked by Shoosmiths about its approach to the partnerships model.
Also demonstrating a long-term commitment to partnership working is Vistry, with the firm revealing plans in September 2023 to merge its housebuilding operations with its partnerships business – assisting the completion of 25,000 homes a year.
Barratt Developments also recently announced its latest deal with Citra Living after forming a strategic partnership in 2021.
“We’re doing a lot with Citra in terms of the private rented sector model,” said Georgina Butler, group partnerships director at Barratt Developments. “For us, it’s about going into those relationships with your eyes open about what everyone wants to achieve.”
Increased scale and speed
These relationships and resulting projects show how partnerships can be key to bringing homes forward at a time when the for-sale market is impacted. The scale and types of developments being progressed also point to the model’s greater potential to accelerate UK housing delivery, create much-needed multi-tenure schemes and cultivate new communities.
The partnerships model is reshaping the living sector. Many developers are now adopting the model, and, in some cases, realigning their strategies to solely focus on partnerships.
On the ground, it also has the capability to unlock regeneration opportunities and provide a range of new homes, spanning affordable, rental, and for-sale. Let’s use Leeds – my home city – as one example of where further embracing the model could have major benefits.
Leeds City Council is currently progressing its housing strategy for 2022-27, with a central vision: “Meeting the city’s housing needs and providing high-quality affordable homes in thriving and inclusive communities, with appropriate support for those who need it.”
One of the housing strategy’s six themes is meeting affordable housing need.
While achieving a 10-year high in 2020/21, with 595 affordable homes constructed, the council has stated that “as a city we continue to fall short of meeting the identified needs for 1,230 affordable homes per annum”. It is in this type of situation that, by encouraging more partnership working, a local authority could look to bolster affordable housing provision.
Commenting from a housing association perspective, Sam Stone, director of land and planning at Abri Group, said: “Typically housebuilders that wouldn’t look to do partnerships are now approaching us at earlier stages and saying, ‘do you want to look at this scheme together – do you want to do it as a full package deal?’ So, essentially, we work together.”
Responding to economic reality
Partnerships can also help meet demand in the private rented sector – another objective for the council as it seeks to alleviate the pressure on the city’s rental market.
Many of the forward-funding deals and partnerships we’re currently seeing in the residential market involve BTR specialists. Indeed, Shoosmiths’ real estate team is advising Aviva Investors on its partnership with Packaged Living, which is spearheading the development of energy-efficient, single family BTR homes across the UK.
“We come at the partnerships model through an interesting lens because we are a developer in our DNA,” said Jonathan Ivory, chief investment officer at Packaged Living. “When we expanded into single family housing, we realised quickly that we couldn’t buy land as competitively as housebuilders and we couldn’t build as efficiently. So, we alighted on partnerships because we believe it’s the most efficient way of allocating our capital.”
If Leeds, or any UK region, wishes to boost housing delivery, especially in the current climate, the partnerships model must play a pivotal role in residential development.
As Aviva Investors and Packaged Living are demonstrating, these agreements can also have significant environmental benefits. They are targeting an EPC-A rating for all properties under development – utilising air source heat pumps and electric-only energy solutions.
Revisiting Leeds’ housing strategy, these examples contribute to a blueprint for how the city could advance “doing everything it can to make all homes net zero as soon as possible”.
Social impact
There’s also the social impact of the partnerships approach, with different types of businesses coming together to create multi-tenure schemes.
“Having lots of different housing tenures on a site, which makes it sustainable with a balanced community on there – that’s what we all want and that’s where people want to live,” added Barratt’s Butler. “Nobody wants an over-provision of one tenure.”
Local authorities and the real estate industry must take a holistic view, acknowledging the wider benefits that partnerships can offer now and in the future – accelerating housing delivery and creating sustainable, quality homes that meet a range of residential needs.
Judy Fawcett is a real estate partner and co-head of Shoosmiths’ living sector
