MIPIM 2016: The UK rental market needs to learn from development in the US, rather than copy it, according to experts from the sector.
The position of the UK market was being discussed in a joint seminar with CBRE, UK Trade & Investment and EG, entitled Realising the UK ambition to create an institutional asset class in the PRS.
Mark Linton, president of Linton Strategies and former adviser to the Obama administration, said that while there were certainly lessons to be learnt, the two markets were very different.
“I don’t think it’s how far behind [the UK market is], they’re almost apples and oranges,” he said. “The best we can do is learn from one another.”
Since its inception, many operators in the growing UK PRS have looked across the pond to the American multi-family housing sector for guidance. Now they are looking for their own development model.
Michela Hancock is the UK development director at US multi-family operator Greystar, which has more than 400,000 homes under management in the States, and aspirations to build 10,000 in the UK. She said it was important to establish the needs of customers, then provide that at an affordable level.
“We recognise we are not just taking the US model without any consideration to the cultural shift here,” she said.
But one lesson to take from the States was ensuring schemes have the potential to adapt to changes and demands in the market. Linton said: “The jury is out here on if millennials will continue with the preferences they have. We are not designing things in the States that fit multiple demographics.”
It was a sentiment echoed by David Cowans, group chief executive of Places for People. The housing association has over 20,000 homes under management in the UK, giving it an enormous amount of experience, and the majority of those homes have not been designed for the rental market.
“If all you do is one thing when consumer norms are shifting, that is not a great business to be in,” said Cowans. “People should broaden their skills and their offer to the populace.”
The Urban Land Institute recently released its updated guidelines on best practice for build-to-rent developments. Alex Notay, ULI UK policy director, said: “The challenge now is not getting caught up in this transition phase, and getting people to understand what the differences [of build-to-rent developments] are. The challenge is not talking only to ourselves.”
Cowans stressed that build-to-rent was just one part of a national approach to housing provision.
”The issue for me is not to see build-to-rent as a standalone entity; the issue is that there is not enough housing in the UK,” he said.
But few could disagree about the important place the PRS was now occupying in housing provision. Chris Lacey, executive director of CBRE, said that money was coming from Asia, the Middle East and North America, alongside domestic funds, and that there was at least £20bn now committed in London and the top 10 UK cities.
Lewis: sector must be clear about needs
Housing and planning minister Brandon Lewis denied a stamp duty hike to 3% for buy-to-let operators would affect institutional development in the private rented sector.
The minister, who gave a keynote speech at this session, said later to EG: “What we have been clear about from the beginning is that we want to see more institutional investment and a more professional rented sector. Where you have got institutional investors involved as part of the development, obviously stamp duty is not an issue because they are not buying these properties, they are developing them, so they pay
the stamp duty on the land. But what I would like, and what we have been arguing for,
is more institutions involved in the development from the beginning all the way through the process.
“The challenge I have laid out to the sector is that it needs to come together and take a unified, cohesive view if it wants to ask government for something it thinks is important. Players need to be clear about what that one thing is.”
The panel:
- Brandon Lewis, minister for state for housing and planning
- Chris Lacey, executive director, CBRE
- Michela Hancock, UK development director, Greystar
- Mark Linton, president, Linton Strategies
- Felice Krikler, director, Assael Architecture
- James Lidgate, director of housing, L&G Capital
- David Cowans, group chief executive, Places for People
- Alex Notay, UK policy director, ULI
- Chaired by Damian Wild, editor, Estates Gazette
In partnership with:
- UK Trade and Investment
- CBRE
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