New housing output continued to grow in November despite a marginal fall in overall construction output, according to the latest Office for National Statistics (ONS) figures published in January.
John Tutte, chief executive officer at Redrow, commented: “It’s very encouraging to see that the strong and sustained upward trend in new housing culminated in an all-time record high in output levels in November.
“It is also encouraging that 190,000 homes were added to the UK’s overall housing stock last year, an annual increase off 11%.
“In my view this puts us on track to hit 200,000 additional homes in 2016 / 2017, which hasn’t been achieved since 2008.”
This increase in housebuilding reflects a steady rise in the volume of planning consents awarded in recent quarters.
Room for growth
The HBF and Glenigan’s latest Housing Pipeline report reveals that planning permissions for 76,242 homes were granted in England during the third quarter of 2016, up 10% on the second quarter of 2016 and 14% higher than the corresponding period in 2015.
In the 12 months to September, the total number of permissions was 289,011, driven by a rise in private housing.
“The rise demonstrates that housebuilders remain confident about market prospects for the year ahead with a firm development pipeline ensuring that housebuilders are well placed to meet demand,” said Allan Wilén, economics director and head of business market intelligence at Glenigan.
However, whilst housing output has increased in recent years, red tape is stifling housebuilders, preventing them from developing substantially more new homes.
Stewart Baseley, executive chairman at the HBF, said: “It is encouraging that so many headline planning permissions are being granted, but we simply have to find a way to unblock the system and reduce the time it takes to get a permission to the stage where builders can actually start building.”
Following the government’s pledge to deliver significantly more new build homes at the start of this parliament, it is now firmly focused on boosting the supply of much needed new build homes, and is taking various measures to do so.
The Neighbourhood Planning Bill, for instance, which is currently going through Parliament, seeks to ensure that planning conditions that require developers to take action before work starts are only used when strictly necessary.
In addition, a new government-backed pilot scheme has just been launched by the Housing and Finance Institute (HFI) in the South East of England that will seek to identify, assess and then unblock infrastructure problems that that are delaying housebuilding.
The scheme will pay particular attention to housing developments that have been delayed due to a lack of water, sewage, electricity, gas or road connectivity.
Natalie Elphicke, chief executive of HFI, commented: “Our hope is that this new pilot scheme, which brings together key players from the private and public sectors, will provide us with a blueprint for fixing these issues and facilitating accelerated housing growth.”
Unsurprisingly, confidence among housebuilders is improving, with 42% of respondents in a recent survey, undertaken by Lloyds Bank, stating that their growth forecasts had increased since the EU vote in June 2016.
“Given the challenges that housebuilders face, the sector is painting a relatively optimistic picture, with improved growth and investment forecasts compared with last year’s survey,” said Pete Flockhart, head of housebuilders, commercial banking, Lloyds Bank.
The fact that many residential property developers are confident that they will succeed in increasing housing delivery in the coming months is not just good news for prospective buyers and renters seeking new build homes, but also for many estate agents looking to boost much needed property instructions.
The housing market may have ended 2016 on a positive note, according to the latest report from the NAEA, with the prospective number of buyers registered with the average agency branch increasing by 12% to 386 in December. But with the average agency branch having just 41 properties on its books, the supply of housing remains low.
“Despite an encouraging December, there remains a clear shortage of homes,” said Mark Hayward (above), NAEA managing director.
But given that housebuilders employ and train their own site staff to handle sales, how does an estate agent persuade developers to work with them?
Working with developers
Firstly, agents looking to win new homes instructions must ensure that they have a strong local presence and demonstrate a strong awareness of market research to identify areas where a developer can add value to their business, which means understanding the specification and detail that housebuilders go to when developing new residential schemes.
“To be successful with developers, agents have to demonstrate an above and beyond understanding of the area that they are working in,” said Anne Currell, group CEO of Currell.
The company opened its Discover East resource centre in 2015 to highlight the extensive development plans taking place in Hackney Wick and Fish Island, a key regeneration area in east London.
Currell (below) added: “The centre houses a 3D interchangeable model, highlighting proposed changes to the infrastructure, planning and developments in the area, as well as dedicated research to this very special part of the city. It’s a great interactive tool for us to engage with clients who love the fact that it is future proof and brings the area to life – as everyone can relate to a model.
“By working alongside the London Legacy Development Corporation (LLDC), we can ensure our information is as accurate as possible as we continue to move forward. The model will soon be transported to our new office in Hackney Wick itself, ensuring visibility in an area that is under close watch from developers.”
Possessing specialist knowledge in niche areas of the new housing sector can also help an agency enhance its reputation and boost property instructions.
Housing associations, for example, are highly protective of their shared ownership sales and have historically preferred to keep them in-house due to a perceived lack of knowledge within the estate agency sector.
But now that the big providers are starting to operate more like private developers and with the size and volume of shared ownership schemes increasing, many are turning to agents to assist with the sales and marketing of their products, according to Currell’s colleague, Martin Fillery (below), who heads up the shared ownership division at the company.
He said: “Coming from an in-house sales role at a large housing association has been a huge benefit when it comes to winning business, as I understand the intricacies involved with effectively selling shared ownership homes.
“This specialist knowledge includes financial assessments, the rental element, homeowners’ responsibilities, resales and staircasing – items that a regular agent will, generally, not be up to speed with.”
Agents seeking to become the preferred development partner for housebuilders normally aim to try and secure an instruction at a very early stage of a potential new development, and in order to do so they typically need to demonstrate specialist knowledge, experience and a great track record in advising on projects, from land acquisition to appraising a site at the pre- or post-planning stages.
Agents need to show that they know how to transform a complex site into a community milestone by offering sound research and quality advice to help developers establish their target audience, as well as the size and type of housing that will increase value and achieve the best returns.
easyProperty CEO, Rob Ellice (left), explained: “Being involved with the full property cycle from start to finish goes hand-in-hand with successful site development and sales. This gives continuity to a developer and minimises perceived risk. It also demonstrates thorough understanding of the residential sector.”
easyProperty launched its ‘land and development’ division last year to unlock deals throughout the UK and some select sites in Europe. To this end, the company provide site opportunities for acquisition and disposal, feasibility consultancy, contractor procurement, registered provider and local authority advisory, as well as sales and marketing.
Ellice said: “When we act for clients on the acquisition of land, we advise on the number of homes, massing, layout, Community Infrastructure Levy (CILs) contributions and Section 106 negotiations. This involves due diligence and risk mitigation through open dialogue with local authorities, registered providers.
“We engage with planning specialists to ensure sites successfully achieve detailed planning consent. Collectively, we have 75 years of experience across the land and development team and in-depth knowledge across all UK regions.”
This market intelligence allows easyProperty to effectively price homes for developers in addition to determining the type of communal amenities suitable, such as playgrounds and gyms, along with viable ancillary services, which may include concierge, home cleaning, dry cleaning and the like, as well as determine demand for household sizes in each particular area or proposed development.
“We work closely with our clients to ensure we reach the right homebuyers in the right areas with the most appropriate product at the best price,” Ellice added.
Aside from actively helping developers when it comes to things like obtaining planning consent, pricing or developing a sales strategy, it is also imperative that agents looking to work with housebuilders go above and beyond the call of duty to provide customer service that truly stands out, in order to match the quality of the new build homes on offer, especially those provided by luxury developers.
John Morley, founder and Managing Director of JOHNS&CO in London, commented: “The level of service required is largely dependent on a developer’s needs and a good agent will adapt accordingly. However, what is important for any agent is to become completely absorbed in every product, getting to know it inside out; being passionate and enthusiastic about the development you are selling is essential.”
Morley (right) informs us that boutique developers usually start out with small teams and rely heavily on “a highly competent agent” to advise them on certain areas of the business, “especially advertising and marketing campaigns”.
“The agent is often also consulted when it comes to the specification in a development."
"A really good agent would also advise a developer on pricing,” he said.
Larger, more established developers, however, are more confident to specify their own pricing and manage the specifications themselves.
“They tend to have large teams and require less support. One of the key areas that they will still seek an agent’s help is with sales,” Morley added.
Ultimately, in order to provide the ideal level of service required, Morley says that it is crucial that agents “get under the skin of the property sector” and “build strong relationships” with developers, “understanding their business entirely”.
Matching the developer’s requirements
To successfully forge new customer relationships with housebuilders, it is vital that your company understands the needs of the local developer and possesses the resources to work hand-in-hand with the builder’s in-house sales team to provide wider support and expertise.
That means having an individual or team, possibly in the form of a dedicated land and new homes department, that not only specialises in new homes and can be called upon to share their knowledge and assist housebuilders, but also offer a geographical spread, enabling them to sell developments across the country, or even across the world.
Being able to sell to a wide array of clients is what housebuilders want to see, so it is important that your firm can deliver this if you want to increase new housing instructions and maximise revenue streams from this highly profitable area of the property market.
- Home Builders Federation
- The Housing and Finance Institute
- Lloyds Bank
*Marc Da Silva is Estate Agent Today and Letting Agent Today Features Editor. You can follow him on Twitter @propertyjourno