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Welcome to day 2! Alistair McIntosh
CIH Presidential Address
Jim Strang Chartered Institute of
Housing
Brexit – the impact on the housing crisis
Robert Grundy Savills
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Brexit – impact on the
Housing Crisis
Effect on the housing
sector and our ability to
build the homes we
need.
7th March 2019
Robert Grundy, Savills
7
The sector has never been more exposed
to a cyclical housing market slowdown.
And Brexit may bring additional risks.
Reliance on Section 106 is risky.
Has it reached a maximum? But a
downturn could cut delivery by 50%.
House price growth has
generated lots of cross-subsidy.
But forecast growth is much
lower for the next five years in
the regions with the biggest
affordable housing supply gaps.
Main
Messages Housing associations much
more reliant on market sale
8
Housing Market Forecasts, Brexit
&
Effect on Affordable
Supply
Source: RICS, Nationwide 10
Sentiment, the cycle & Brexit
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
-80
-60
-40
-20
0
20
40
60
80
Oct-
08
Ap
r-0
9
Oct-
09
Apr-
10
Oct-
10
Apr-
11
Oct-
11
Apr-
12
Oct-
12
Apr-
13
Oct-
13
Apr-
14
Oct-
14
Apr-
15
Oct-
15
Apr-
16
Oct-
16
Apr-
17
Oct-
17
Apr-
18
Oct-
18
New
buyer
enquir
ies:
bala
nce o
f opin
ion
Annual House Price Growth New Buyer Enquiries
Transaction numbers and drivers of activity
Source: HMRC, UK Finance 11
1,287,620 in the year to June 2016
1,184,260 in the year to September 2018
-8.0% since the referendum
Help to Buy supporting FTB numbers
Tax restrictions for Buy to Let investors
First increases in interest rates
Mortgage regulations & stress testing
Source: Oxford Economics, Savills 12
Affordability
2019 2020 2021 2022 2023
Incomes
+2.0% +2.9% +3.4% +3.5% +3.5%
Source: Oxford Economics, Savills 13
Affordability
2019 2020 2021 2022 2023
Incomes
+2.0% +2.9% +3.4% +3.5% +3.5%
Bank base rate
1.0% 1.5% 1.8% 2.3% 2.8%
Source: Oxford Economics, Savills 14
Affordability
2019 2020 2021 2022 2023
Incomes
+2.0% +2.9% +3.4% +3.5% +3.5%
Bank base rate
1.0% 1.5% 1.8% 2.3% 2.8%
House prices
+1.5% +4.0% +3.0% +2.5% +3.0%
Five year forecasts
16.3% 14.8% Income growth
House price growth
15
16
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
Q…
Q…
Q…
Q…
Q…
Q…
Q…
Q…
Q…
Q…
Q…
Q…
Q…
Q…
Q…
Q…
Q…
Q…
Q…
Q…
Q…
Ho
us
e P
ric
e R
ati
o
London v UK Outer Met v UK
Past the point of inflexion
Source: Savills Research, Nationwide, Land Registry
Five year forecasts
Source: Savills Research 17
21
.6%
20
.5%
19
.3%
19
.3%
19
.3%
18
.2%
17
.6%
12
.6%
9.3
%
9.3
%
4.5
%
0%
5%
10%
15%
20%
25%
0%
5%
10%
15%
20%
25%
Last year (2018 - 2022) This Year (2019 - 2023)
Source: UK Finance 18
Affordability is stretched for the average buyer with a mortgage
£0
£20,000
£40,000
£60,000
£80,000
£100,000
£120,000
£140,000
£160,000
2.9 3.4 3.9
Loan to income
Ave
rag
e d
ep
osit
London
LTI Income Mortgage Deposit
North 2.99 39,237 117,319 23,068
Scotland 3.04 41,970 127,589 24,426
Wales 3.22 39,386 126,823 23,087
Y&H 3.24 40,349 130,731 28,196
North West 3.25 41,518 134,934 28,494
East Mids 3.46 43,385 150,110 40,261
West Mids 3.50 43,457 152,098 38,524
East Anglia 3.76 46,764 175,831 55,305
South West 3.81 46,623 177,634 57,257
South East 3.99 58,759 234,446 76,468
London 4.03 75,940 306,038 122,952
South East
19
Which limits transaction levels
Source: Savills, Land Registry
53%
of pre-crunch average
Fallen by
22% since 2014
London
Shared Ownership: How important is sales volume?
20
Source: Statistical Data Release
Slowdown in shared ownership sales 2017 - 18
England,
excluding London
Inner London 2017: 16 % rise in sales
Rate of increase considerably down in
2018: 4% rise in sales
2017: 1,596 sales
2018: 914 sales
43 % decrease
21
First Tranche Shared Ownership Sales:
Source: Statistical Data Release
22
“The lack of clarity around Brexit is having a profound effect on the sales market”
Notting Hill Genesis
“It’s an incredibly quiet market” Geeta Nanda, Metropolitan Thames Valley
23
28th Feb 2019
Transactions outlook in the next 5 years
Source: Savills Research, HMRC 24
1,175,000 in 2018
1,160,000 in 2023
-1% movement
First Time Buyers
-3%
Buy to Let
-23%
Home Movers
0% Cash Buyer
+3%
Source: Oxford Economics, Savills 25
Rental Outlook
2019 2020 2021 2022 2023
Incomes
+2.0% +2.9% +3.4% +3.5% +3.5%
CPI +2.0% +1.6% +1.7% +1.9% +1.9%
Source: Oxford Economics, Savills 26
Rental Outlook
2019 2020 2021 2022 2023
Incomes
+2.0% +2.9% +3.4% +3.5% +3.5%
CPI +2.0% +1.6% +1.7% +1.9% +1.9%
UK rents
1.0% +2.0% +3.0% +3.5% +3.5%
London rents
+0.5% +1.5% +4.0% +4.5% +4.5%
27
Effect on cross-subsidy and
affordable supply
45%
47%
43%
39%
21%
£27,000
£30,000
£36,000
£44,000
£68,000
0.0 to 5.9
5.9 to 7.6
7.6 to 9.1
9.1 to11.4
11.4 to30.7
Source: Savills using ONS, HM Land Registry, DCLG and CACI
Lower quartile house
price to lower
quartile earnings
ratio
Income required to buy
the average new home Percentage of
households with the
required income
Much of London & SE - only 1/5th of households can afford to buy a new home
0.0 to 5.9
5.9 to 7.6
7.6 to 9.1
9.1 to 11.4
11.4 to 30.7
Source: Savills using HM Land Registry data 29
Slowing?
Accelerating?
Implications for cross-subsidy?
Source: Savills using HM Land Registry data 30
Capacity for cross subsidy
8,900 Av. affordable
delivery 2013/14 to 2016/17
700 shortfall
9,600 Sub-market
housing need
The North
Source: Savills using HM Land Registry data 31
Capacity for cross subsidy
7,500 Av. affordable
delivery 2013/14 to 2016/17
2,700 shortfall
10,200
Sub-market housing need
The Midlands
Source: Savills using HM Land Registry data 32
Capacity for cross subsidy
15,500
Av. affordable delivery
2013/14 to 2016/17
18,600
shortfall
34,100
Sub-market housing need
The South
Source: Savills using HM Land Registry data 33
Capacity for cross subsidy
8,800 Av. affordable
delivery 2013/14 to 2016/17
33,700
shortfall
42,500
Sub-market housing need
London
34
The end of support for sales
from Help to Buy?
0
50
100
150
200
0.0
0.5
1.0
1.5
2.0
2.5
Q4
19
78
Q4
19
80
Q4
19
82
Q4
19
84
Q4 1
986
Q4
19
88
Q4
19
90
Q4
19
92
Q4
19
94
Q4 1
996
Q4
19
98
Q4
20
00
Q4
20
02
Q4
20
04
Q4
20
06
Q4
20
08
Q4
20
10
Q4
20
12
Q4
20
14
Q4
20
16
Q4
20
18
Priva
te n
ew
ho
me
s c
om
ple
tio
ns,
thousands
All
resid
en
tia
l tr
an
sa
ctio
ns, m
illio
ns
Help to Buy: supporting new homes sales – for how long??
35
Help to Buy
after 2021…
Only 2 more years then current scheme will end
Only first time buyers will qualify for support
New lower maximum value caps except in London
Existing HTB buyers will pay 1.5% increasing at RPI.
Impact on cross subsidy?
All residential transactions
Private new homes completions
36
Can we continue to rely on
Section 106?
20,000?
50%
Relying on Section 106 is risky
Source: MHCLG 37
0%
2%
4%
6%
8%
10%
0
5,000
10,000
15,000
20,000200…
200…
200…
200…
200…
200…
200…
200…
200…
200…
201…
201…
201…
201…
201…
201…
201…
Se
ctio
n 1
06
co
mp
letio
ns
as a
% o
f n
et a
dd
itio
na
l d
we
llin
gs
Nu
mb
er
of n
il g
ran
t S
ectio
n 1
06
un
its
co
mp
lete
d
Low cost home ownership
Intermediate Rent
Affordable Rent
What if there is a downturn?
Maximum capacity?
38
What’s our strategy?
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39
More like this?
More grant support to reduce dependence on sales?
Source: Savills 40
£0
£200
£400
£600
£800
£1,000
£1,200
£1,400
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Gra
nt
fundin
g,
mill
ions
No. o
f a
dditio
nal hom
es f
rom
£
5bn
wo
rkin
g c
apital
Market sale Shared ownership Market rent
Affordable rent Cash Grant
The sector already has its hand out for more money
41
London social housing providers call for
extra no deal Brexit funds By Dominic Brady - 27 Feb 19
Housing associations, councils and the mayor of London have
called on the government to hand over £5.2bn to protect housing
in the capital against the impact of a no deal Brexit.
Are we making the economic case: Housing to the rescue?
42
Source: Savills using HM Land Registry
With a HRA Without a HRA
Leeds Sunderland
Sheffield Sefton
Brighton and Hove Liverpool
Milton Keynes Bromley
Manchester Bolton
Bristol Torbay
Wigan Blaenau
Hillingdon Plymouth
Gateshead Halton
Leicester Knowsley
Local authority HRA debt cap lifted – where are the opportunities?
43
HA’s Development at scale?
Developing & placemaking at scale across all tenures
The housing and community landlord
Wide range of price points
Real potential for HAs to fill this gap
House builders will only do so much
Find the right partners
Work with other sources of capital
Long term investors
Need land pipeline
Housing Associations are small players in land promotion
Source: Savills, Glenigan 45
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
Pre-PlanningApplication
OutlineApplication
OutlinePermission
ReservedMatters
DetailedApplication
ReservedMattersGranted
DetailedPermission
Application process Full permission
Nu
mbe
r o
f u
nits
Housebuilder Developer Strategic Land Promoter
Other Private Sector Public Sector Registered Provider
Housebuilders have a longer pipeline of land
Source: Housebuilder annual reports, 7 of the top 10: Barratt, Bellway, Bovis, Crest Nicholson, Persimmon, Redrow, Taylor Wimpey 46
0%
10%
20%
30%
40%
50%
60%
70%
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2011 2012 2013 2014 2015 2016 2017
Pro
port
ion o
f all
additio
nal plo
ts
Num
ber
of
plo
ts
Plots converted Plots bought % converted
A range of price points can have a huge impact on absorption rate
0
100
200
300
400
500
600
700
800
900
1,000
1 2 3 4 5 6 7 8 9
Num
ber
of units
sold
/occupie
d
Year
Other(downsizerunits?)
PRS
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Partnerships/ JV’s with equity investors?
48
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Construction Capacity - Off-site manufacture/ modular/ MMC
49
Thank you
© Savills 2018
This presentation is for general informative purposes only. It may not be
published, reproduced or quoted in part or in whole, nor may it be used as a
basis for any contract, prospectus, agreement or other document without
prior consent. While all effort has been made to ensure its accuracy, Savills
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part of it in any form is prohibited without written permission from Savills
Research.
Jonathan Portes Kings College, London
@jdportes UKandEU.ac.uk
Brexit and Housing Jonathan Portes
King’s College London & UKandEU March 2019
Forecast growth (IMF)
Scenarios
• “Deal”: reduces uncertainty in short term but future relationship remains undefined
• “No Deal”: sharp hit to consumer and business confidence, possible (likely?)
recession
• Article 50 extension: continued uncertainty
• General election and/or referendum: raises uncertainty in short run, *might*
decrease it in medium term
• No realistic scenario avoids high level of political and economic uncertainty in at
least short/medium term
No Deal: Bank of England modelling
Long run economic impacts
Some key variables
• Employment/wages
• Immigration: impact on demand and (via) workforce supply
• Business confidence/bank lending/spreads
• Regional impacts
Key elements of Political Declaration/future
deal
@jdportes UKandEU.ac.uk
Brexit and Housing Jonathan Portes
King’s College London & UKandEU March 2019
Can we really end homelessness?
David Bogle Hightown Housing Association
Can We Really End
Homelessness?
Total Housing Conference 2019
David Bogle
Hightown Housing Association &
Homes for Cathy
Homelessness
• The Number One issue for housing and social housing
• Rising number of families and children in temporary
housing
• Rough sleepers in every city and town
Homes for Cathy
• 76 housing associations and organisations
• Nine Homes for Cathy Commitments
• Campaigning for more housing and resources for
homeless people
• Annual conference on March 25th in London with CIH
and Ocean Media
• Working with Crisis, NHF, CIH and others
Can We Really End Homelessness? • Heart v. head
• Social purpose
• Thousands of brilliant housing and support projects
• H.A.s – charities – staff - volunteers
• Government pledge – rough sleepers strategy – new
funding
• Public support – donations
• Housing First
• Capital funding v. revenue funding
Can We Really End Homelessness?
• History
• Funding
• Building more homes
• Rents and affordability
• Welfare benefits - poverty
• Support needs – drugs, mental health, domestic
violence, training/work
Housing Associations
• Part of the solution not part of the problem
• Must get homelessness on the agenda of Boards, CEOs,
NHF etc.
• Audit delivery against nine commitments
• KPIs - Sector scorecard – Regulator
Housing Associations
• Build more homes
• Pledge additional resources
• Take risks! Its all about social purpose!
• Three top priorities – homelessness, homelessness,
homelessness!
Francesca Albanese Crisis
Melanie Rees Chartered Institute of Housing
Tackling the stigma attached to social housing
Melanie Rees Chartered Institute of Housing
Jenny Hill, ARCH tenants’ group chair
Aileen Evans, CEO, Grand Union Housing
Melanie Rees, CIH
Leslie Channon, HACT and See the Person
How can we tackle stigma in social
housing?
What is stigma?
“A mark of disgrace associated with a particular circumstance,
quality, or person”
Synonym: shame, disgrace, dishonour
(Source: Oxford English Dictionary)
What do we know about stigma in social housing?
What are the causes?
What about ‘us’?
Possible solutions?
What do you think?
Over to you…
Leslie Channon See the Person Campaign
See the Person
(Benefit to Society campaign) Leslie Channon, founding member
Where we’ve been
Campaign set up in 2017
Small group of tenants and housing staff wanting
to make a difference
Now 30+ sponsors
Why is there a stigma?
LSE research says:
What a Year - 2018
House of Commons launch – w/ Housing Minister, Dominic Rabb, MP
PM acknowledges stigma of social housing at NatFed summit
SHGP - chapter 4 on tackling stigma – tenant campaign leaders work with MHCLG
Housing Minister signs our pledge to tackle negative stereotyping
Campagin has reached more than 300,000 people through social media
LSE research published setting out the background of stigma
Reprint of Fair Press for Tenants (our publication with the NUJ)
… but there is more to do
Work with us…
Together we are stronger
Amplify tenants’ voices
Recognise where the sector is part of the problem –
& become part of the solution
New leadership committee meeting this month
@2benefitsociety
facebook.com/benefittosociety
Making Sense of Complexity
Prof David Snowden Cognitive Edge
How to build an organisation your customers LOVE
Oke Eleazu Bought by Many
Creating an organization that customers love!
Oke Eleazu, Chief Operating Officer
92
March 2019
93
Who is Oke Eleazu ?
94
95
What makes you different?
What fundamental truths do few people agree with you on?
- Peter Thiel, Zero to One
96
Convention vs Secrets
Market Provides
Customer Needs
Business Provides
Product/Market Fit
Competition
Hard!
What important
truths do few people agree with you on?
By being laser focused on customer needs before anything else, you can build products and services that they love and therefore build strong relationships with them
98
TECHNOLOGY GLOBAL RECESSION DEMOGRAPHICS
100
Customer Commitments
Customer Metrics
Comms & Engagement Reward Technology
Purpose
Delivery
Support
Customer Proposition
100
Leadership & People Capability
Governance
A purpose, an obsession and a change in the world order!
102
Our values make us #Gamechangers.
• We are passionate about customers and our work
• We work collaboratively
• We think for ourselves and try stuff
• We are grown up
• We are open
• We respect the individual
• We believe in output over input
• We are social, have fun and celebrate success
103
Clear Customer Principles ...
Everything easy
Show we care
Stay connected
A customer-led model.
Online search
data
Unmet
consumer
demand
Social
insights
Proposition
development Groups
>1 billion lines of UK search
data analysed to date
3rd party products
105
Co-creation of products with our groups.
“If you were to design your own pet insurance product, what features would it have?”
We had 40,000 responses which directly influenced our
product design
“Fed up of paying and never getting anything back”
“Totally unpredictable renewal prices…the search each year is such an effort”
“Insurance is a waste of time – just save instead”
“Now that I’ve claimed I’m trapped…”
106
“I think I want a Cat / Dog”
“I consider and research
everything I need for my cat/dog”
“I buy them insurance and
enjoy peace of mind” “Help! I need some advice and support”
“Do I buy insurance again?”
*
Community
Marketing Quote
Quote Issue Help or
change Claim
Renewals
Communities and Engagement are key to our ecosystem
Online purchase journey.
69% mobile users Mobile first Natural language form
Experience worth sharing.
Coming soon!
Experience worth sharing.
The results
110
111
We are already in esteemed company!
Our Net Promoter Score for
the last 12 months is 77
Over 82% of customers give us 9 or 10 out of 10 when asked how likely they are
to recommend us
• 4.8 stars out of 5
• NPS Score 77 (UK Industry
Average 17)
• 82% of customers are
promoters
• 50,000 policies sold
• 100% y-o-y growth
• Renewal rate 92%
112
Our customers seem to like us. . .
113
Unprecedented customer engagement.
114
We are social, have fun and
celebrate success
eNPS 57
What important
truths do few people agree with you on?
By establishing a coaching relationships with all customers, by redefining housing management, we can improve outcomes for both the customer and the business.
Any Questions?...
