What's in the Pipeline for Social Housing in 2023?

As the housing sector looks to move on from a turbulent year of housebuilding and retrofit, 2023 offers new hope and fresh ideas for how the UK can upgrade existing housing stock while simultaneously adding to it.

At the back end of 2022, analysis from the BPF showed a 20 per cent year-onyear increase in the total number of Buildto-Rent homes in regional towns and cities as the sector continues to evolve to meet new and growing demands.

Looking at the pipeline trends moving into 2023 is an effective tool for tracking broader progress in the sector, as it perfectly encapsulates long-term growth prospects.

The report highlighted that: “The total number of Build-to-Rent (BTR) homes either in planning, under construction or completed in the UK is up 15% between Q3 2021 and Q3 2022 from 209,313 to 240,202.

The sector is making progress, but a hiatus in 2023 is likely

This offers hope for further progress in the year's initial quarter and beyond, but the impacts of scrapping key housebuilding targets are yet to be seen across the sector. Expanding on the analysis, it was found that: “The BTR pipeline in the regions has also increased by 8% quarter-on-quarter and 22% on an annual basis with 77,282 homes planned.”

Despite the optimism of progression in planning phases, the analysis, conducted at the end of the third quarter in collaboration with Savills, shows there are signs of a slowdown, at least in the short-term, with starts in the first three quarters of 2022 at 10,493, compared to 14,410 at the same point in 2021.

In a statement released by the BPF, Ian Fletcher, Director of Policy, commented: “The Build-to-Rent market had proliferated under an economic backdrop of low-interest rates and low inflation over the last ten years. Current market conditions are clearly very different, but crucially there continues to be demand for high quality professionally managed homes in London and across the regions.”

From the analysis, it is clear that the pipeline of BTR homes would benefit from a more standardised planning approach. Very few local authorities have BTR policies in their local plan, so the application process is often bespoke and takes a long-time. For a sector that is driven by income returns, a long time in planning can hinder progress.

Adding to this, Jacqui Daly, Director of Residential Investment Research at Savills, explained: “The BTR sector has grown strongly, with the pipeline now at over 240,000, but there’s a real need for planning efficiencies and policy support to help maintain the momentum, particularly in major cities where the private rentals market supply issues are most acute.”

A new toolkit from the BPF launched to boost delivery

Following this analysis, the BPF launched a toolkit to boost affordable home delivery available through their website. The reasoning behind the toolkit is to avoid the 95,000 per annum deficit in new affordable homes that the sector faces.

As part of the practical guide to support the increased delivery of affordable homes. This ‘toolkit’ aims to demystify partnership models, learn from those that have taken place, and assist the industry in evaluating effective ways to increase the delivery of much needed affordable housing.

Rob Beiley, Chairman of the British Property Federation’s Affordable Housing Committee and Partner, Trowers & Hamlins, said: “We have launched this toolkit as a practical guide to facilitate effective and long-term partnerships between investors and housing associations. We know that against inflationary pressures and increased investment in existing stock, Housing Associations have to pare back their development programmes.

The toolkit analyses the different structures for partnerships between housing associations and for-profits or investors and identifies several challenges that should be addressed to speed up the creation of partnerships between housing associations and the newer for-profit social housing operators:

1 | Holistic market data around valuations to help partners understand whether disposals/acquisitions are appropriate.

2 | More standardisation of management agreements for the management of social housing by housing associations for forprofits to speed up and simplify the process of putting these agreements in place.

3 | A code of governance for for-profits, along the lines of the existing code for housing associations, to build confidence in for-profit registered providers as partners.

4 | Support for the regulator having more resources to help bulk up their ability to work through new applications and ongoing oversight more fully.

5 | The resolution, or at least clarification, of the different tax and grant treatment faced by housing associations and for-profits.