9 JUL 2019
Paul Cutbill, FRICS, opened this year's RICS Residential Property Conference by noting that the London event has become a philosophical midway point in the calendar, where the residential sector looks back on what has passed in the first six months, and considers what is to come.
This was certainly the theme of the day as speakers took the opportunity to reflect on changes to the profession in recent years and incoming legislative and technological disruptions.
Speaking in his capacity as Chair of the regulation of property agents working group, Lord Richard Best praised the important role that RICS played in the group's findings. Social housing has fallen from 34% to 17%, while since 2006, the private rental sector has grown from 9% to 19.8%. Social housing provision is very heavily regulated, and housing associations have their own ombudsman. In contrast, the private rental sector doesn't have a regulator even though it is now the larger sector. Although the report has not been published yet, Lord Best noted that the group intends to recommend a property agent regulator. This won't cover landlords, even though half of tenants deal directly with their landlord, and AirBnB will not fall under the regulator's reach. As such, the introduction of the regulator represents a step towards increasing regulation rather than a regulatory endpoint.
The first panel brought together Paul Hackett of Optivo, Vivienne King of the Soho Housing Association, Michela Hancock of Greystar and Nick Whitten of JLL. The group provided an informative discussion on the problems of affordability in the current market and some tentative solutions. Michela stated a clear definition of affordability is needed to provide certainty for investors and renters. Paul added that an income-based definition of affordability rather than land value would be more equitable. With regards to the thorny issue of rent capping, Nick noted that most institutional-level investors are more comfortable with index-linked rent stabilisation as a concept.
He also stated that environmental social governance is a growing trend amongst investors, to which Vivienne added that investing in the public realm, quantified through integrated reporting, may be a way to highlight the social value of a project in future. All panellists agreed that modern methods of construction are gradually becoming more pervasive, and both Greystar and Optivo are already leading the way in the UK with modular builds.
At the first breakout session, Craig Ross, RICS Built Environment Associate Director, reported on the ongoing industry response to the issue of fire safety. The final Hackitt report proposed a new regulatory framework, with more robust regulations and guidance, clearer communication on the realistic fire resistance of materials, and a golden thread of information that clearly records the original design intent of the building and any changes are managed through a formal procedure. Craig expects that in future the definition of Higher-Risk Residential Buildings (HRRB) will be amended, and competency strategies will have to change to reflect higher observation criteria.
During his market update, Lucian Cook, Director of Residential Research of Savills reported that housing delivery in England was up 29% (to 244,628) in the year to Q1 2019, with planning consents up 45% in the year to Q3 2018. Help to Buy, he said, had worked in terms of delivery, however warned that regardless of other controversies and the extension to 2023, in terms of supply, the scheme may have done as much as it can under current planning policies.
After lunch, the role of technology was addressed by panellists Orla Shields of Getrentr, Mike Bristow of Crowdproperty and Claire Owen of Loop. Addressing the term disruption which is attached to so many tech projects these days, all panellists agreed that it can be unhelpful. Claire described technology as an enabler which streamlines our work lives, and Orla noted that proptech is more about maximising profitability over disruption. Taking a broader approach, Mike noted that property is the largest asset class in the world but is handled very inefficiently. As a result, there is a lot of room for tech to make big changes quickly.
Delegates were also asked to vote on whether they believed PropTech was leading unprecedented change in the residential property market and therefore should be the main investment focus for all organisations – 74% either agreed or strongly agreed.
Talks on data handling and cybercrime, the digitisation of the land registry and the development of the UK custom and self-build home market rounded out the afternoon's proceedings. By the end of the conference it was clear that the relationship between housing and technology is growing ever closer, and surveyors who embrace this relationship will find opportunities ahead.