Gemma Leonard, Head of Residential Development at international law firm DAC Beachcroft, looks at what the changes in how we live and work mean for the evolution of the UK’s garden communities.
The current garden settlements programme was launched by the coalition government in April 2014 with the publication of the Locally-led Garden Cities prospectus. Nearly a decade on, we live in a very changed world.
The reference to the ‘coalition government’ makes that year now feel very distant. And, of course, like any historical watershed, recent history is now routinely referenced as sitting either side of the pandemic. This seminal moment for our society prompts reflection about how much has changed in the way we want to live and how and where we want to spend our time. All this has implications for housing.
Hybrid working has seen many people are spending a lot more time at home and in their local neighbourhoods. If you’ve moved from doing five days in the office to three, you’re potentially spending twice as much time in and around where you live. This is both a physical and psychological shift which makes you expect more from the place you live and also its locale.
The phrase ‘space for a home study’ has entered estate agency marketing parlance, and high-rise developments in cities have been striving to provide more amenity for residents ‘on the doorstep’. These are often in the form of shared facilities such as co-working space which respond to the fact that if you’re spending twice as much time in your home you may need some company and a change of scenery.
The implications of everything that has transpired in the past three years also goes beyond simply the configuration of homes. Attitude shifts have been profound and there has been a something of a sea-change in sentiment regarding the occupation and ownership of homes. Back in 2014, the Build-to-Rent revolution which has seen billions of pounds pour into the private rented sector had just started and the rise of ‘Generation Rent’ had yet to take hold.
More recently, the sustained rise in interest rates has shown that having a mortgage is not the relatively benign commitment that it has been since the Bank of England Base Rate moved to 1% in 2008 and stayed below that for the next 14 years.
In contrast, by December of next year, a further 2m mortgage holders will have come off their previous fixed mortgage rate and will be adjusting to new higher levels of repayment. This will cause some cases of severe financial pressure and is likely to generate negative media coverage of the home ownership model.
Some commentators believe that, in the long-run, the Single Family Housing sector will be the strongest rental model as it focuses on the dominant demographic segment of the population. In that respect, there are similarities with the US where the Single Family Rental sector has been a mature market for decades. Since 2001, the number of SFR homes in the US has risen by 35% to over 14m and it will be interesting to see if the nascent UK sector emulates this curve.
JLL reports that the UK has attracted £2.8bn in SFR investment, making it the largest market in Europe, with the largest platforms planning to build portfolios of more than £12bn between them. The sector is numerically modest although it has grown to 9,400 operational homes in the UK, with a further 11,900 in the pipeline. Whilst current investor ambitions would see this rise to 50,000 by 2025, the scope for growth is clear and garden communities can capitalise on this trend.
Of course, most garden communities were originally conceived on the ‘build-to-sell’ model and, if more rental properties are to be accommodated, there would need to be some significant restructuring of the model, and the selection criteria for development partners.
A greater emphasis on rented property would also have ramifications about ongoing property management and whether rented homes would be aggregated in one area of a scheme or sprinkled throughout it.
It is good sense that garden communities should reflect society and what it requires but there are clearly challenges in terms of placemaking and development agreement structuring. Consulting with the existing local community is essential to start tracking how attitudes are evolving. The Harlow & Gilston Garden Town project carried out an in-person and digital consultation process last year and interestingly one of the areas of enquiry showed that of the 16-24 year-olds surveyed, 54% envisaged they would not be living in the area within five years. This perhaps speaks to the fact that if you are tied to the workplace for fewer days a week then the prospect of commuting seems less daunting.
Hybrid working may mean ultimately mean for many people that they live further from the workplace than they would have pre-pandemic. This more mobile pattern of residential demand must bring opportunity in locations that were perhaps previously seen as being off-pitch.
The other significant trend which may now most impact garden communities is sustainability and the duty of care that growing Environmental, Social & Governance requirements are imposing on the whole development chain.
The result of the next General Election is set to define future sustainability policy and also the role that housing will play in the drive to net zero. In August, Labour announced that as part of its election manifesto, it is drawing up plans for new towns and suburbs as part of a drive for economic growth. In the announcement, this support was closely coupled to initiatives on renewable energy and infrastructure.
Meanwhile, the UK’s need for new housing is still acute. Garden communities can play a major role in addressing this need but part of that will entail responding to our changed world and the way we now live.