The U.K. faces a significant housing challenge. In simple terms, there are not enough new homes being built each year to meet the demands of the population.
The U.K. government has set a target to see 300,000 new homes built annually by the mid-2020s in an attempt to solve the national housing shortage. So there is serious work to be done.
Lloyds Banking Group has an important role to play in helping people across Britain to get a home. The organization has made several pledges around housing as part of its most recent prosper plan and is making good progress towards them. A healthy housing market is a key indicator of broader economic strength and that’s why housing is core to the Group’s commitment to help Britain prosper.
Forming a new type of partnership
Housing Growth Partnership (HGP) is a social-impact equity investor. It was established in 2015 as a joint venture between Lloyds Banking Group and Homes England. The formation was unique — the first housing focused public—private partnership with the U.K. government.
When we established the partnership, we had two very clear and specific goals in mind: to support the sustainable growth of regional residential developers across the U.K. through investment and mentoring; and to accelerate housing delivery. We know that one of the chief obstacles preventing small firms from growing and developing in the housing industry is capital constraints, and we established the partnership to help with this. HGP invests in residential projects, freeing up housebuilder equity that can be used on other schemes.
HGP was founded with an initial £100 million of seed capital and, following additional investment, now has nearly £1 billion-worth of homes under construction across the U.K. — over 3,000 new homes.
We’ll kick start the construction of another 1,000 homes by 2020 and aim to have delivered 10,000 homes by 2025.
First and foremost we’re focused on building homes. We’re already funding the build of thousands of new houses across the country. We’ll kick start the construction of another 1,000 homes by 2020 and aim to have delivered 10,000 homes by 2025.
Funding is one part of the puzzle, but the role of HGP goes beyond simply investing money. It seeks to be a genuine partner. We’re developing long-term relationships with smaller housebuilders, helping them to grow their businesses and the number of homes they are able to build across Britain. In fact, over the last 12 months our senior adviser panel of housing experts from across the U.K. has delivered more than 1,000 hours of free mentoring to small housebuilders. We all benefit when these firms can overcome those initial entry barriers, establish themselves in the industry and grow.
Addressing systemic challenges in the housing industry
It’s clear through the conversations we have with U.K. housebuilders that they face challenges at all stages of the development process.
A fundamental issue is the supply of skilled labor. I’m meeting with more and more of our partners who are looking to address this by employing apprentices. Many have formed connections with their local colleges and education centers, and are actively encouraging young people into the sector. Getting youngsters involved and engaged in housing helps create a pipeline of future leaders and also brings in a diverse range of innovative thinking.
This is where the partnership can make the most impact. By investing in companies across the housing supply chain, we can help firms employ more people, develop specialist skills and create more opportunities in the future.
We also lobby for crucial change across the industry and drive financial innovation in the sector. The determination of planning permissions, alongside the growing number of consented conditions to satisfy ahead of starting work on-site is a particular area of concern for housebuilders.
It’s clear through the conversations we have with U.K. housebuilders that they face challenges at all stages of the development process.
This complex and often difficult process limits their ability to grow their businesses and, in turn, increase the supply of new homes to the U.K. market. We are working hard with our partners to understand the key issues within the U.K. planning system and identify what can be done to address them. Alongside this, we are also looking at how we can support developers to introduce Modern Methods of Construction into their building processes.
Finding new solutions to the challenge of a skills and labor shortage, alongside the need to increase the speed of production and develop more energy-efficient homes will be key to the future success of the industry.
New solutions to housing challenges
We’re often asked ‘what comes next?’ There is so much innovation and development in housing at the moment and it’s evolving quickly. At the moment we are seeing a strong focus on Modern Methods of Construction.
What’s fascinating about this type of production is how efficient it is to produce units in a controlled environment — an environment that crucially, is weather proof. This could be a real game changer in the U.K.
What’s clear though is that the U.K.’s housing challenges cannot be solved in isolation. Genuine collaboration, both across the industry and in partnership with the U.K. government, will be crucial in driving further innovation and overcoming the challenges that the industry faces.
By ANDY HULME
Source: Politico