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WHERE THE HOUSEBUILDING COMMUNITY MEETS
NOVEMBER 2019
LOAN RANGERS
Finance Special
LOAD OF RUBBISH
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SMART
KITCHEN Appliance of Science showhouse | November 2019
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contents NEWS 10 27 31 145 147 151
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News Agency News Sustainability News Proptech News Product News Supplier News
REGULARS 21
George Sell meets Alan Dodds, managing director of Roca UK
25
Special Agent Tim Wardley, managing director, Spicerhaart Land & New Homes
73
Inside Out
FEATURES
FINANCE SPECIAL
35
45
Product Portfolio Doors & Windows
139 The Marketeers
65 81
Industry leaders have written a book called ‘Regenerating Cities’
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Matt White Will the Stirling Prize winner be another case of ‘hero’ today, gone tomorrow?
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Jamie Lester Pay attention to the key areas and you can achieve robust sales in a buyer’s market
Redrow Rupert Bates meets the new man at the housebuilder’s helm, chief operating officer Matthew Pratt
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Fleur Homes Managing director Joff Brooker looks at what last year’s Best Small Housebuilder award has meant for the business
143 Isla MacFarlane Generation rent demands more from its homes, and the BTR sector is using tech to answer the call
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105 Sponsors
Feature Gill Oliver explores the importance of the relationship between lender and borrower, with candour and clarity vital components
57
WHATHOUSE? AWARDS 95
Close Brothers Property Finance Rupert Bates steps outside the London bubble to discover the national stories of housebuilding and financing
Sub-Zero & Wolf Big to small, ice to fire, Sub-Zero & Wolf can supply appliances to suit any developer’s needs
COMMENT Rupert Bates
Builder’s Breakfast Rupert Bates meets with Cleanslate & Travis Perkins, building a partnership to build better homes
Kate Geraghty, group marketing manager, Octagon Developments
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Sustainability Roger Hunt discovers how developers are tackling the scourge of the wheelie bin with underground waste systems
Appliances
85
81
65
Supply Chain
59
Comment: Graeme Alfille-Cook
123 Feature Simon Graham reports from the National Housing Summit at the Barbican, London
127 Comment: Simon Graham In tough political and economic times, it is vital for society that housing associations stay true to their social purpose
129 News
A lack of finance is contributing to the housing shortfall; can alternative lenders help fill the funding gap?
SHOW HOUSE JOBS
City with David Smith
159 Careers News
Barratt Developments is a bellwether for housebuilding, so what can the UK’s biggest builder tell us about the market?
61
AFFORDABLE HOUSING SPECIAL
News
161 Profile: Andrew Rogers Director of marketing suite designers and installers RogersWatson
163 Maitland Selwyn
The recruitment specialist offers its top CV and interview tips to get yourself noticed
165 Movers & Shakers
Messages from the 2019 WhatHouse? Awards sponsors
Front cover: Sub-Zero & Wolf PUBLISHED BY Globespan Media Ltd, Fifth Floor, 291-299 Borough High Street, London SE1 1JG. Tel: 020 7940 1070 • EDITORIAL DIRECTOR Rupert Bates rb@globespanmedia.com • CHIEF SUB-EDITOR Suzanne Frost scf@globespanmedia.com • DIGITAL EDITOR Isla MacFarlane im@showhouse.co.uk • JOBS EDITOR Keith Osborne ko@whathouse.com • CREATIVE DIRECTOR Kelly Bates kb@globespanmedia.com • SALES DIRECTOR Adrian Talbot at@globespanmedia.com • SALES EXECUTIVE Joshua Kerr jk@showhouse.co.uk • © Globespan Media 2019. No part of this publication may be reproduced without prior written permission from the publishers. The greatest care has been taken to ensure accuracy, but the publishers cannot accept responsibility for errors and omissions and the views expressed are not necessarily those of the publishers.
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ISSN 1468–747X
finance | special
FINANCE
SPECIAL In association with
45 CLOSE BROTHERS PROPERTY FINANCE Rupert Bates steps outside the London bubble to discover the national stories of housebuilding and financing
51 FEATURE Gill Oliver explores the importance of the relationship between lender and borrower, with candour and clarity vital components
57 COMMENT: GRAEME ALFILLE-COOK A lack of finance is contributing to the housing shortfall; can alternative lenders help fill the funding gap?
59 CITY WITH DAVID SMITH Barratt Developments is a bellwether for housebuilding, so what can the UK’s biggest builder tell us about the market?
61 NEWS The latest stories from the development finance sector
showhouse November 2019 |43
In association with
finance | comment
MIND THE GAP GRAEME ALFILLE-COOK, chief strategy officer for Urban Exposure, explores how alternative lenders are helping to plug the funding gap and helping SMEs make up the housing shortfall
T
he challenges facing the government in meeting its target of delivering 300,000 new homes built each year are well known. Issues with planning, labour or material costs, not to mention the uncertain macroeconomic environment and continuing political deadlock over Brexit are often cited. The role of finance, and access to it for SME housebuilders, is often overlooked in helping solve the delivery challenge. Availability of development finance has certainly fallen since the pre-global financial crisis highs. Research shows that debt outstanding and secured by residential development projects for sale declined by approximately 35% from its 2008 peak of £23.9bn to approximately £15.5bn by the year end of 2017. While this is a significant drop, this is explained by the hubristic approach taken by certain lenders pre financial crisis, which ramped up real estate exposure beyond sensible levels. Today’s £15.5bn is still a large number, indicating a vibrant development finance market. This is cause for optimism. As a result of the financial crisis, increased regulation has placed additional burdens on the traditional lending banks. The ‘slotting’ regime is most prominent, compelling banks to hold higher levels of risk weighted assets against real estate development facilities. While positive in that it has so far helped avoid hubris, it renders development finance more costly. Uncertainty over Brexit has, anecdotally, resulted in increased risk aversion among the clearing banks. Data shows that there remains a substantial need for housing delivery, which in turn drives the demands of financing requirements of SME housebuilders. Looking at government and Nationwide Building Society data, and based on the annual target for new homes, our research estimates that there is £394bn of funding needed over the next decade across the UK to achieve annual housing delivery targets. Of this, the ‘funding gap’ (relating to projected housing build shortfall) equates to £237bn of development finance need. A huge amount. This funding requirement story plays out across the UK in different areas as demand for housing continues to significantly outstrip supply. In the West Midlands, for example, research shows local housebuilders will need up to an extra £15bn to meet the West Midland’s target of building 215,000 new homes in the region by 2030/1. Plugging this gap is a challenge but, as ever, this brings opportunity. Providing the finance to enable SME housebuilders to build the homes the UK
needs and do so much more quickly is essential to getting anywhere near the housing delivery targets. SME housebuilders can be major contributors and can help accelerate volume delivery to meet targets. Increasing the availability of financing for SME developers will help them compete more effectively against the national housebuilding entities benefiting from relatively cheap corporate level funding facilities. Furthermore, the national housebuilders business models are based upon balancing their land to unit conversion delivery with profit generation. This militates against closing the demand gap. Despite the relative lack of activity from traditional bank lenders, there are many active lenders operating with a broad spectrum of appetite, from plain vanilla, lowly geared pre-let development lending to bespoke land acquisition or bridging facilities. This provides borrowers with choice and liquidity. The government is also playing its role and has a particular focus on catalysing SME developers with financing support. Both Homes England and the Greater London Authority are innovative, supportive, cost-effective and willing to go where others might not. Both are reassuringly disciplined in their diligence process, with structures designed to anticipate and mitigate risk. When working for Apex Airspace I was encouraged by the number of alternative lenders who had appetite to support an innovative SME using modular units to develop rooftops. I engaged with lenders such as Puma Capital, Avamore Capital and United Trust Bank, all of which showed a strong understanding of development finance and a willingness to engage. Urban Exposure focuses on deal sizes of £20m and upwards with no facility limit. When it comes to unlocking new schemes Urban Exposure has been very active providing developers with much-need funding support. Urban Exposure recently provided a £44.7m loan to BSR Wembley Ltd to build 68 onebedroom flats and 159 studio flats in Wembley. Elsewhere in the UK, Urban Exposure lent Galliard £66.9m for a
mixed-use residential development in Birmingham’s Timber Yard. This shows that the lending market remains open despite the current headwinds. There is always more to be done to help housing delivery, particularly for those SMEs that do not have the resources of the national players. A recent study conducted by the Federation of Master Builders highlighted that lack of available viable land was the most commonly cited barrier to increasing output for SME developers, with planning and access to finance being second and third respectively. Policymakers please note. It is encouraging that the green paper unveiled by housing secretary Robert Jenrick said that ministers will be consulting on overhauling the planning system in order to make it simpler and fairer for everyone. With new initiatives from the government, such as the recently announced measures to introduce a national index of all brownfield data, as well as improved access to finance, hopefully SMEs can help bridge the delivery gap and meet Britain’s housing need. With Britain’s population set to grow by three million people over the next decade, there is a pressing need to deliver fit-for-purpose housing. Ongoing political distractions compromise the real estate industry’s ability to meet this critical challenge; however, all is not bad. Encouraging government interventions via bodies such as Homes England make a big difference to SMEs. Alternative lenders also see the opportunity in supporting SME developers meet the structural housing demand shortfall. Yes, there are challenges, and yes delivering schemes can be difficult, but with perseverance and with the right partners, quality operators with the right schemes can still find a way. sh Urban Exposure plc is a specialist real estate financier and asset manager, completing £622.5m of new committed loans over the past 18 months. Its core business is managing third-party capital, deployed in the form of debt finance to SME residential developers.
showhouse November 2019 |57
That Sunday evening feeling in your stomach about going back to work? I never have that. Colleagues embody and demonstrate our values each day. From the morning smile as you walk through the door to the offices, to the friendly helpful Colleagues in each department, people at Churchill genuinely enjoy being at work, so naturally it is a positive place to be each day. We are proud to say that we have happy Colleagues in every department, having placed 2nd in the Sunday Times Top 100 Best Companies to Work For is a testament to that.
A Hands on CEO - Our Chairman & CEO Spencer McCarthy often spends time out on site, making sure he meets and talks to construction workers. Having worked in the industry as a carpenter himself, housebuilding is in Spencer’s blood, and he has seen first-hand the challenges and difficulties that workers face, and is keen to stay very much hands. History & Heritage - Churchill is a family-run Company specialising in building beautiful, purpose-built retirement apartments for the young at heart. As we have grown, the Company still maintains that family feel, because we hire people who match our culture and believe in our product as much as we do.
We focus on one thing, and we do it really well - Our developments are designed to provide the best lifestyle choice for an independent, safe, secure and fulfilled retirement. We are proud to say that we have a clear vision and offer an uncomplicated product to our Customers. We operate on family values - Although the Company has grown over the years, with a strong team of over 600 to date, Churchill still maintains its family feel. All Colleagues are passionate about our product, and creating the best lifestyle for our Customers is top priority. We have happy Colleagues and Customers that prove the quality of our product, and the strength of the business.
Analysts forecast that by 2039, 37% of all households in the UK will be headed up by people aged over 65. They’re compelling figures, and it’s our responsibility to provide the right homes in the right places for our ageing population. Which is why we need great people working for us, in all departments.
For more information on available vacancies and to apply, please visit our website:
churchillretirement.co.uk/careers
2019
We call it award-winning. You can call it home. 5 star customer satisfaction 2019.
Brand new homes. Streets ahead of the rest. Say goodbye to typical houses and welcome a brand new distinctive home with unique exteriors and stylish interiors. Our open spaces and designs cater to any taste, whether that’s modern and contemporary or traditionally home.
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