"If we are to deliver for prospective homeowners in the years ahead, then that is going to have to involve improving our existing homes alongside breaking ground on new developments."
It’s no secret there is a housing shortage in the UK. The imbalance between supply and demand has resulted in sustained rises in property prices, despite the various recent challenges like the pandemic and higher interest rates.
This is highlighted by the latest data from Propertymark which found typical estate agency branches have around 80 registered buyers on their books, yet brought on an average of just 10 new homes per branch in February. That’s an awful lot of competition for each property as soon as it is listed on the market.
It’s a similar story on rentals, with branches reporting typically 10 new applicants registering for each available property, driving average rents to new highs.
Political parties of all stripes have acknowledged the need to provide more homes in order to meet this demand, but at least part of the solution lies in the homes we already have.
Bringing empty homes back into use
There are an enormous number of empty homes in the UK, with recent analysis suggesting as many as 1.55 million properties currently lying vacant.
Why are so many homes left unused? In some cases it may be the owner has passed on, with their loved ones sitting on the empty property in the hopes of saving up the money needed to refurbish it before selling it on.
Alternatively, when the property has been jointly inherited, it can take lengthy periods before the inheritors determine what to do with it, leaving it at the risk of falling into disrepair.
Crucially, it’s a problem that’s getting worse. A study last year by the Local Government Association found the number of empty homes in England alone had risen by 10% in the previous five years.
This is all the more striking given measures introduced over the last decade or so to try to encourage greater use of our existing housing stock, such as the empty homes premium. This premium has been strengthened recently, with double council tax kicking in after a property has been empty for just 12 months, rather than the previous level of two years.
Meeting demand
When we talk about meeting the demand for housing in the UK, and addressing our undersupply of homes, the focus is often dominated by new housebuilding.
There is a certain logic to that - it is only by adding to the housing stock that we are going to meet that increased demand, after all.
However, I would argue there also needs to be far more attention paid towards getting the maximum out of our existing housing stock. The fact we have so many homes already which are failing to deliver for potential homeowners is shocking, particularly when you consider it may only take a little work to bring these properties up to scratch.
If we are to deliver for prospective homeowners in the years ahead, then that is going to have to involve improving our existing homes alongside breaking ground on new developments.
Appetite among developers
Thankfully, it’s clear that developers are well aware of this situation. We have seen first-hand at Tuscan the interest amongst developers in getting more from our existing housing, the desire to revamp the bricks and mortar we already have in order to better deliver for potential buyers or tenants.
That appetite amongst developers has helped inform the recent revamp of our refurbishment product, with a new facility launched for those looking to carry out light and medium-sized refurb projects. Funding is available up to 100% of the build costs and 70% of the purchase price, while the underwriting and drawdown processes are handled in-house by Tuscan, with the aim of delivering a more straightforward process for developers.
This launch has been informed by our conversations with brokers and their clients, reflecting the sort of flexible financing that is most valuable to them when carrying out these sorts of improvement works.
It’s a crucial reminder of how important it is for advisers to work closely with lenders who understand this market and what developers need, and have a track record of delivering the funding that allows them to complete their refurbishment projects successfully.
