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19-Mar-2018

Access over ownership

By ADP

By Stephen Miles

The sharing economy and new model of professionalised living is having an impact on the housing market

“An Englishman’s home is his Castle” is a British proverb that is embedded in our culture, and since the 1930s we have been a nation that has strived for home ownership.

The idea of a ‘property-owned-democracy’ was introduced by Tory MP Noel Skelton in 1923. Over the next twenty years, political will paved the way for the construction of over four million houses on land outside towns. This together with affordable mortgages, gave the young middle class keys to their own front door in suburbia.

By the 1980s, Thatcher had taken this idea one step further. The ‘Right to Buy Act’ gave ordinary families the ability to buy their council houses. The act exemplified Thatcher’s belief that capitalism was good, not only for the rich, but also for people on modest incomes.

Through home ownership, we have seen massive increases in personal wealth and equity growth, which in itself is part of the housing crisis we see today.  Housing was never intended to be an ‘asset class’ or ‘investment’, it was intended to be a home; a place to live.  Our system has consequently become reliant on capitalisation, and the rapid growth of the housing stock, to sustain market demand. Housing development is strangled by the high-volume house builders to ensure that value is retained; resulting in a broken system.

What began as a ‘property-owning democracy’ is no longer democratic, as it excludes the large number of people who can no longer afford to buy homes. The losers in this model are the first time buyers, the families, and the workers who move to cities to be near employment or academic opportunities. Rising house prices in major cities is starting to cause significant issues for workers and students alike. This together with high childcare costs, and escalating commuting costs, is putting ever increasing pressure on young people’s finances.

It is therefore a widely held belief that the move towards ‘access over ownership’ has been fuelled by increasing house prices, and the dramatic tightening of lending, following the economic crash in 2008. This however, is only part of the story.

In fact, a number of reports, including an interesting exposé by Knight Frank published in 2015, indicated that the move away from the traditional ownership model had already started years before the economic crash. As consumers, we were starting to question the idea that our possessions represent our invested wealth.

Whether we call it ‘PRS’ (Private Rented Sector) or ‘BTR’ (Build to Rent) it is clear that there is a new model of housing that is disrupting the market. There is also a growing trend in professionalised living, imported from a hybrid of German and American living.

When speaking with senior executives in the property sector – BTR is still met with some quiet disbelief: Why would anyone pay such relatively high rents to live somewhere that they do not own?

This however, is not the right question – because it is flawed in its assumption that the housing market, as we currently understand it, will be the model of the future. Young people (and as it happens, people of all ages) want to live in cities. They want the convenience and excitement associated with everything on your doorstep. They want to feel safe, have high quality housing that is easily managed, and is flexible enough to meet the demands of modern working.

Young people have multiple career changes: ‘a job for life’ it seems, is no longer something to be sought after. Instead, people crave experiences, and the ability to be agile and dynamic as a workforce.

We must embrace this, as it is already here, and is here to stay. I believe that in the long term in the UK, BTR or professionalised living will have a number of positive effects. 

  • It will release housing stock (must of it in a state of disrepair) that is being held by groups of wealthy private owners back to the traditional housing market. This will free up homes for families and those who still wish to buy properties. 
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  • If developed with enough scale, BTR will stabilise the capital growth of housing, and will keep city living affordable for the masses. This will enable talent and workforce to remain in key cities. 
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  • Through institutional investment, it will become a highly managed and a significant contributor to the housing stock, assisting in meeting the poorly attained government targets for housing delivery. 
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  • It will become ‘tenure-blind’. As we move away from archaic and destructive separation in our private and subsidised housing markets, we need to give everyone a chance to live and work in the areas they would choose to, regardless of wealth.   

Although BTR is in its infancy, it’s growing. We are seeing tens of thousands of units arriving on the market, which gives me great excitement.

Not for some time outside of London, has there been so much buzz around the delivery of housing. As professionals our job is to make sure that we deliver houses that are robust, timeless, and add something to city landscape, while creating places for people to live.

What does the future hold for us? I recently read an article written by Price Waterhouse Cooper (PWC), about ‘The sharing economy’ and the most ethereal version of the ‘access’ model. Significant market disrupters like crowdfunding, Airbnb and Uber, have demonstrated that through the power of social media and the internet, ownership is irrelevant, and by extension even ‘traditional renting’ could become obsolete in the not too distant future. Will we see large scale ‘professional shared living’ buildings, where sharing through a collective ownership across cities and countries allows for absolute flexibility and accessibility? The mind boggles.

I think that modern cities need a variety of high quality places to live. BTR isn’t the answer to all of the housing challenges, but it has a part a play, and a significant one at that. I for one, am excited to see what the future holds.

ADP is involved in a number of BTR projects across the UK including a 150 unit proposal in Glasgow City centre. For more details contact the author stephen.miles@adp-architecture.com. #Residential #BTR #PRS #BuildtoRent 

 

ABOUT THE AUTHOR

Stephen Miles

Stephen Miles

Stephen is a director of ADP and based primarily in the Edinburgh studio, but active across the UK. He is widely involved in both the public and private sectors and is an active promoter of architecture and design.

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