Tag Archives: harry downes

Government action demanded to support private rented sector

Two separate calls have come from those in the property industry, calling on the government to involve itself actively in the promotion of the private rented sector. Only with this level of support, they argue, can the sector gain traction, and help solve the UK’s housing crisis.

Agent GVA suggests three initiatives, to help the housing market. In its Development Outlook for summer 2014, the firm suggests there needs to be:

* a substantial expansion of the new town/garden city initiative

* further stimulation of the private rented sector “on sites less suitable for owner occupier housing”

* more public sector affordable homes

However, the researchers at GVA are under no illusions: “All these initiatives would require increases in government expenditure, which seems unlikely to occur in an era of public sector cut backs.”

That said, the government has previously committed itself to substantial support for the housing market including Help to Buy, Funding for Lending, Build to Rent and Get Britain Building. It’s just that, together, these initiatives may have helped in some way, but do not appear to have solved the key issue.

Meanwhile, PRS developer Fizzy Living believes it is only a change in planning law that will help move things up a gear. The company’s managing director Harry Downes says rental housing needs its own planning classification. “We need to get tot he point where the government, local authorities and planners understand the PRS,” he told Property Week, “where it has its own planning classification and where it forms part of a section 106 agreement.”

Downes has suggested his firm would bind itself to work with local authorities, introducing such restrictions as a cap on incomes for those eligible to rent. “If the government is serious about solving the housing crisis, then it just has to give local authorities the policy to make it happen.”

Downes calls on planners to back private rented sector

Local planners need to embrace the professional private rented sector, and recognise it in development agreements. Only by including a private rented provision in section 106 agreements, will the sector gain the traction it needs.

That’s the argument put forward by Harry Downes, managing director of Fizzy Living. PRS developments need a leg-up from the planners, he says, in order to give them a chance in the current overheated development market. Currently, most sites to go a developer who builds for sale, as their business model – a quick turnaround with a full financial exit – allows them to bid more for building land.

“While true long-term PRS operators have to directly compete for sites with the deliverers of open-market sale property, the growth will be slow,” he warns in Property Week. “All sites are fiercely contested…the winner is usually the one whose residential valuation exercise knocks out the highest land value.”

The problem is, he adds, that someone holding the properties they build for a decade or more, with the liabilities of managing those properties built into the cost structure, will not be able to come up with such a frothy return as a house builder.

Downes says there are plenty of investors waiting to participate in the market, similar in scale to the Abu Dhabi Investment Authority, which put £200 million behind Fizzy Living earlier this year. Ready to invest long term, they have the potential to significantly change the rental market for the better, giving tenants well-designed, professionally managed properties they will want to live in.

Downes says one solution would be for section 106 agreements on major sites to include a PRS factor. These are legal documents, regularly entered into by developers and local authorities, and can cover a wide range of commitments from the parties. Often they deliver local infrastructure benefits, from new roads right down to park benches.
The terms of the deal could include a minimum size of, say, 50 units – to help deliver scale; it would cover a long term commitment for the rental units to remain so for a minimum period of, say, 10 years; and “where appropriate…an income cap on tenants, to ensure the flats are actually tenanted by the generation rent target market”.

As Downes reiterates, the problem of affordability is not going away anytime soon – in London, anyone looking to buy will currently need a deposit of around £80,000 to purchase their first home. The professional private rented sector is ready to deliver – but it needs a few simple elements of support to get the momentum going.

Downes calls on planners to relax affordable housing rules

A few simple changes of outdated planning rules could boost the provision of professionally managed private rented sector (PRS) housing in London and other British cities. Planners need to simply be more open minded in determining what is “affordable housing”, and use existing legal frameworks to ensure PRS homes are delivered and ring fenced for the medium term.

That’s the plea from Harry Downes, director of Fizzy Living. Writing in a recent edition of Property Week, Downes says PRS landlords and their tenants have much to offer localities, and local councils should be actively encouraging them.

Fizzy is the private rented sector business owned by Thames Valley Housing Group, a major housing association with a portfolio of 15,000 properties across London and the south east. Fizzy Living is already offering private rented sector flats for rent at three developments in east London, and one in Epsom, Surrey, and is promising a new deal for renters including prompt attention to any issues, free wifi, and flexible lease terms.

Fizzy Living's new Epsom development

Fizzy Living’s new Epsom development

The private rented sector is really the only practical accommodation option for a rapidly growing group of people. These are young professionals who have a good job, ambitions and a social network, but lack the massive deposit currently required to get a property with a mortgage. Downes labels them “rentysomethings”.

There is an easy way for councils to solve the problem “to achieve their commitment to provide affordable housing – as in, housing that is affordable – in their boroughs,” says Downes. “They can do this by using the section 106 framework to allow buildings of more than 50 flats to be developed as 10 year PRS opportunities.”

Downes says the professional PRS landlord presents four key advantages that benefit both the tenant, and the local community. By building substantial size projects with an average of around 100 flats, professional landlords deliver scale, and with that comes a positive impact on communities. Unlike a private landlord, who can sell out at any time, there is long term commitment, which means tenants are more likely to stay long term, too. Great, proactive management means buildings that stay working well. And finally, there is community, something professional landlords today know is part of making their tenants feel wanted – whether that’s a centrally managed fitness facility, or an online forum that helps individuals find flatmates.

Downes says there are lots of people now wanting to rent; around 2.2 million 20 to 24 year olds were recorded in the 2011 census in the UK. They are, he insists, “valuable assets” as they “spend their time and money in the local bars, shops and amenities, pay taxes and contribute to their community”. Fizzy, and companies like his, would very much wish to accommodate these renters, and are looking for the opportunities to do so. They just need the planners to be a little more helpful, when allocating sites for development.