At the peaks and troughs of a business cycle the participants in an industry sector either see risk or opportunity. So how should not for-profit Registered Providers (RP’s) respond to the current conditions in the housing market?

Overheating to Stability

Remember this time last year, summer 2022. The property market was hotter than the proverbial tin roof! The impact of the first interest rate rise in February 2022 had not taken effect. Now economists say it takes 18 months for such increases to show fruits and on cue in August 2023 The Guardian announced:

“UK house prices fell 5.3% in August compared with the same month last year, the fastest annual drop in 14 years, according to Nationwide Building Society.”

However, look under the bonnet. Hometrack reported in August 2023:

“Affordability is improving relative to earnings as wages rise, up 7% over the last year. Housing affordability, on a house price to earnings basis, looks set to improve by 9-10% over 2023 as prices register modest falls and average earnings increase.

The UK house price to earnings ratio will be in line with the 20-year average at the end of 2023 at 6.3x. On a regional basis, affordability has improved the most in London. Here, the price to earnings ratio will get into single digits for the first time in 11 years as house price growth has been low since 2016.

We expect earnings to continue to rise faster than house prices again in 2024, improving the measure further, especially in southern England. This, together with mortgage rates in the 4-5% range, will support sales volumes closer to the long-run average”

Hometrack also reported annual price falls in London, South East and East of England of 1%, 0.9% and 1% respectively. Hardly a crash and barely a ‘correction’. However, we have not reached the peak impact moment for interest rates which will flow through until the end of 2024. For now, the market looks set to be subdued and stable as opposed to manic – a good thing I suppose!

Opportunity

What has changed radically is sentiment. Sentiment in the private housing building sector – the for-profit sector – particularly the volume housebuilders (VHB’s).

Faced with significant drops in sales rates many have adjusted their output of homes to defend their profit and cash positions. Inevitably their need for immediate consented land has significantly reduced leading to (quiet) redundancies in land teams, withdrawals from deals (including those contracted on) or land prices being chipped or deferred. Smaller regional and local developers are also being cautious on the land buying front being part of the same herd mentality. Overall developers are being less gung-ho about land purchases but it is still competitive. Agents and landowners are no longer sure whether a VHB will perform.

RP’s are now seen as the new Steady Eddie’s in the land market – well funded, enhanced grant regimes – in continuous need of development land to deliver for those with a housing need – it’s a big number. RP’s have also benefited from the demise of the Help to Buy scheme which has propped up the VHB’s since 2013. Now shared ownership has filled that gap and many RP’s are experiencing new levels of reservations – even in this market! Furthermore, in London there has been a significant increase in grant rates for ‘social rent’ product which is making schemes in the capital viable and more risk free from sales related exposure. Social rent has also had a grant boost from Homes England but the impact of that has been less impressive than in London.

Coupled with the above build costs are reported to have flatlined – having been through a period of rampant inflation. Planning consents should increase after the nutrient neutrality matter was settled.

So, from an RP’s point of view the moment has arrived to fulfil their missions – deliver a range of affordable homes for those on low to medium incomes. There is now less competition for land, build costs are stable, the grant regime allows for the viable delivery of more rented product (not susceptible to the market) and shared ownership demand is more robust than ever.

We’re ready to make hay with you.

V10 is perfectly placed to deliver package deals to the RP sector. We specialise in delivering off-market land coupled with a competent build contractor – both with fixed prices and completely derisked – the full service.

If you are in an RP with development ambitions in the current market then we want to be by your side. Call us.

Comments by: Karl Timberlake, Land & New Business Director at V10.

So, as I am sat in Starbucks with an iced drink and 30 degree sun on my back, not bad for little old England, I am reflecting on the my recent back to college experience.

Having graduated from Long Road Sixth form college just over 10 years ago I had the pleasure in being invited to return to speak to students about my career and what the construction industry can offer students, like it did myself 10 years ago. Did I succeed in inspiring… I hope so.

My Journey

Did I ever see myself going into construction all those years ago, leaving college and having university offers ready to go, one summer really decided it all.

I had spent the three years at sixth form studying, as well as leading the southeast Conservative association, being the youngest leader and Parish Councillor in the country.

My last year of college I finally decided to stand for election as a District Councillor, for me the first step on the political ladder of what I had hoped would be a long and successful political career. To keep things short and simple, I lost the local election by 90 votes and it caused me to re-evaluate my situation and, having looked long and hard, if I had any political ambition in the future, then a career would be the best and most authentic approach to take to be taken seriously and to have some more life experience.

Why construction I hear you ask. Well truthfully, I fell into it via the governments apprenticeship programme. As a Business Administrator onsite, I fell in love with the industry even more than I had in Spain as an apprentice electrician at Sevillana. I had a Construction Director and Contracts Manager that nurtured me and helped me grow, while letting me onsite to snag works and manage minor aspects of the build. The rest as they say is history… well as I told the students starting as a business administrator, then moving to Site Management, Contracts management, Pre-Construction Management, and to a Group role left me well-grounded and covered every aspect of the business. It taught me what key drivers the business needed, made me an effective and influential member of group, and taught me that nobody knows everything.

Coming Home

Having spoken to the course leaders and deputy head of the college they are wanting to teach and improve students understanding of sustainability and the impact it has over ever industry. After my presentation I was asked some great questions around nutrient neutrality, the impact of Biodiversity Net Gain, and what the new building regulations actually mean.

I also had the pleasure of setting the students the task of designing a three room student pod from Timber Frame, which in a months time, I will be returning to the College to look, judge, and give feedback on their project, which they are paying particular design focus, on fire, insulation, and ventilation.

The students we given the hierarchy structure of some of the top ten housebuilders, and what a day to day looks like with someone working in the industry.  The conveyance from me is that the people in these organisations, including here at V10 Homes, is that we are passionate about development; it’s like an itch you cannot scratch, the hamster wheel of development is always turning, once one is complete the next one isn’t far behind!

How does the industry benefit?

When I started my presentation to the to the students, I spoke about the skills gap in the construction industry and that there is more to the industry than trades, and site teams, there is a whole team of people from architects to quantity surveyors, that all play a vital role in delivering much needed homes in the UK. Less and less students are turning to professions within the industry, as they see no benefits for them, and the industry is seen as a dirty industry, cold and wet, long hours. While the hours can be long, and the onsite staff (including trades) do get wet and cold, there is also a misnomer that these a low paying career options, that are not viable to live on, which is simply untrue, and that the way the workforce has shifted, especially since Covid, has made the workforce more modern with dress codes and hour flexibility. The use of technology is coming to the forefront, Teams, BIM, and many other project management tools make for an exciting time to be in the industry.

My passion and love of development will always be there, go around new towns and developments that I help start, manage, or finish is a source of great pride and I hope that came through to inspire the future of our industry!

• Photo shows Keiran Wakley, V10’s Head of Pre-Construction & Sustainability, inspiring future constructors.

Head of Land & New Business

V10 is a leading and reputable provider of package deals to the RP sector. We currently have over 1200 homes placed in our customers development pipelines. With our RP and construction partners we enable the delivery of additional affordable homes to those with need. This is why V10 exists. We are looking for a dynamic person to join our growing professional team to deliver on our current business plan and shape the next one. Do you have the drive, ambition, energy and entrepreneurial flair to make things happen where others flounder or fail in development? If so, read on.

Position:

The Head of Land and New Business will work directly with the Land and New Business Director. First and foremost you will assist in sourcing suitable off-market development land within key geographical areas that support the growth of the business. Working alongside our RP customers and our in-house dynamic pre-construction team you will appraise and shape commercially optimal schemes to achieve a competitive position in the land market. After agreeing Head of Terms with a land seller and a package deal with our RP customers you will manage the legal process to completion.

Within this role you will:

1. Build strong long-term relationships with agents, landowners, promoters and RP’s to acquire sites and procure new package deals for V10.
2. Need to be able to cold call land prospects and RP contacts and show persistence.
3. Undertake quantitative and qualitative market research and understand the needs of a home buyer and localised housing demand. An agency background would be an advantage.
4. Undertake and optimise appraisals (ideally using ProVal)
5. Produce commercial viabilities prior to a land offer
6. Assess land opportunities thoroughly and make recommendations to the team based on sound commercial judgement.
7. Make land offers and diligently negotiate terms
8. Qualify RP package offers and agree terms
9. Manage the legal process from HOT’s to completion alongside the pre-construction team who will be managing the linked JCT.
10. Manage and prioritise all the above workstreams simultaneously.

What you’ll need:

• Excellent and proven negotiation and communication skills
• Demonstrate an understanding and experience of the development process across a range of building and tenure types.
• Demonstrate an understanding of RP funding and grant funding opportunities.
• Comprehensive understanding of the financial elements of development projects and their impact on scheme viability.
• Experience of using development appraisal software
• Strong commercial awareness and risk management skills.
• Excellent financial and project management skills
• A strong understanding of both the land sale and the acquisition process including knowledge of options, contracts and various deeds.
• Have a clear understanding of the planning process.
• Appropriate land experience within a developer, RP or housebuilder
• Be eager to keep all stakeholders, internal and external to V10 updated in realtime
• Have ambition for yourself and the team and a positive attitude to succeed.
• An ability to use digital media to promote yourself alongside V10.
• Above all else you’ll need the abilities and mindset of a ‘dealer’ coupled with a keen eye for detail and an ability to anticipate commercial consequences

For more information and details of this highly renumerate and flexible package please email Karl Timberlake (Land & New Business Director) at [email protected]

The last week or so has been a small watershed moment in my career, a career which has now spanned 35 years.

Firstly, I had a near milestone birthday which always triggers a reflection on how far you’ve come and how far you have to go. Secondly, I was invited to be a guest speaker to a group of young developers – which provoked the question of this blog. Thirdly, I received some kindly worded recognition from a former trainee employee – thanking me for giving them the opportunity to enter the field of development and showing them how to ‘add value’ – which they are harnessing to great effect in their new role.

The Developers Club

When I stood up last week to make a presentation as guest speaker to The Developers Club (TDC) in Mayfair, I was intrigued to gauge the entrepreneurial spirit in the room –  after all, without that ingredient no business can start, flourish or survive. TDC is a group of residential developers under the age of forty who own and manage their own businesses from all over the UK. They are all serving specialist residential niche markets and have adopted various business models, each sharing common opportunities and challenges. The aim of the group is to cross-fertilise ideas and best practice whilst harnessing the experience of those developers with longer tooths. It’s a potent approach driving forward the speed of each company’s continuous improvement and commercial evolution. This is an important catalyst to the group as collectively they have committed to delivering 10,000 new homes by 2030 to address the housing crisis – a laudable mission!

Entrepreneurial Talent

It became clear straight away that the group were highly informed and very professional. There was that X factor feeling in the audience – that energy – that passion. I started my presentation with a flashback to 1969 – the first moment when I made a profit reselling Christmas wrapping paper to my neighbours at the age of five – then we moved on to 1971 when I got into the property game – Monopoly! Fast forward 50+ years and here I am with a business based in London delivering over 1,000 homes to seven housing associations in nine locations. Over thirty of those years I’ve spent self-employed with no safety net of employment and perks or silver spoon ready to feed me in the background if my dreams and endeavours were to fail. It is the same for all those in TDC – each juggling the needs of their customers, investors, employees, suppliers and themselves whilst exploiting market advantages and avoiding overwhelming risk to maintain and grow their business volumes to meet the aims of TDC. After the presentation it was clear from the penetrative nature of the questioning, before and during the dinner that followed, that these young developers had the spirit, the swagger, the level headedness and open mindedness to learn, apply and achieve.

The Future Is Secure

In the next few years, like all of us on that conveyor belt of life, I shall exit stage left one way or another. When I look at the young talent we are nurturing in V10’s ranks to take over the business, the progress of some of the young talent that has left V10’s ranks and the young talent that the members of TDC represent I have concluded that the future of residential development is secured – so long as successive governments adopt pro-development policies.

Comments by:

Karl Timberlake

Land & New Business Director

V10

As I got home last night from doing my weekly shop, I took a moment to look at my receipt – £65.79. What would have cost me £51.49 a year ago, the cost of inflation has added £14 to my shopping bill.

Given the fact that I love my job, I could not help but think where build costs currently sit, and if they will come down? Here is my take on where we have come from pre-pandemic and my predictions for the next 12 months.

The Good Times

Now I know that my £14 increase in my shopping bill is a little different from the rising build costs, however it can be something so small that triggers a thought process that makes you ask more questions than can possibly be answered.

Let me take you back to February 2020, the pre-pandemic good times! Imagine the scene across the country, the construction industry is booming, house prices are at an all-time high, land is at a premium, and the manufacturing sector where the construction industry sources key materials is at capacity – working around the clock to provide key materials, white goods, bricks, timber, pre-cast concrete, windows and everything in-between. At the time the warehouses were stocked with around three to six months’ worth of stock, with localised shortages and elongated lead times, something that the industry copes with on a week-by-week basis.

Fast forward to June 2020, many, if not most of the construction industry was just starting to come back on a site-by-site basis, new procedures were in place for social distancing, and the industry was extremely worried about the impact that the pandemic would have on people’s ability and eagerness to buy homes. In short, we needn’t have worried, demand was at an all-time high, and the industry was the busiest I had seen it in eight years. The trouble this caused was unseen for around three to five months, material was getting through to sites, however given the demand and coupled with the fact that manufacturing was coming back slowly, the warehouse stock soon ran out and therefore this meant that they were only producing to order with little or no stock. What this meant was that to get available materials into the sector, prices were raised to slow demand and to help produce more.

A year on from the pandemic the build cost for materials had jumped to over 20%, now it would be wrong just to say the pandemic, as another big impact on the sector was around the Government legislation surrounding red diesel, which pushed the groundworker and manufacturer prices up even further. All this with fuel prices at their highest ever; I remember paying £2 a litre in diesel, given I passed my test in 2015, I started driving when I was paying £1 per litre, how times have changed!

Today’s Impact

So where are we today? Finally after eighteen months, costs are stabilising. Yes, they are higher than pre-pandemic, however commercial teams are finding it easier to predict and manage and are no longer having to report cost increases on a monthly/weekly basis. The price of timber has come down, to pre-pandemic levels (on a side note this means that the price of timber frame open panel is now on par with traditional build for the first time since I have been doing timber frame). Main contractors are now more comfortable fixing their prices for 12-18 months – some even longer. The price of diesel and petrol has come down by around 50p, not quite pre-pandemic levels but a more sustainable and fixed price than the volatility seen over the previous 12 months. Brick prices had been slowly creeping up pre-pandemic and given what the pandemic did to the manufacturing sector, they have continued to increase. Only recently did they slow to a point where they have now levelled out, and while it remains to be seen if this stays the same over the next three months it shows that key elements to our industry are starting to level out and stabilise.

Where next?

Now this is the part that I must put something on the block and give an educated guess, or a Gary Neville type prediction – let’s hope I have a better prediction rate than Gary Neville though!

So, in my opinion, prices will over the course of 2023 start to decrease. At V10 we are seeing main contractors fix for the duration of the programme which is including the planning journey – something which was un-heard of only three months ago. Why are they doing this you may ask? Well, in truth its more than likely they see this time over the next three months where costs are at the tipping point and are at the highest they will be. The likelihood is that come the end of the year prices for materials and manufactured goods will actually fall, so therefore rather than having to reduce their build cost they start to make a margin as they can buy it cheaper.

With timber coming down even further, it remains to be seen whether bricks will come down greatly, however pre-cast concrete prices are slowly creeping down which is giving both timber trame and RC frame a more competitive base than those of traditional build methods. This means contractors and developers have the ability to chop and change to get the best commercial outcome for all sites going forward.

Unspoken Labour Costs

Now I could not write this without factoring in the unspoken labour costs. The cost increases seen to date have all been manufacturing and buying costs. Due to the rise in consumer inflation over the last six months companies up and down the country have given benefits to employees. Certain developers have given up to £2,000 over the course of the last four months to those workers earning less than £49,000. It remains to be seen whether wage demands increase. If so, then it could mean a rise in total build cost inflation. However most companies have factored that in over the past six months and therefore it’s unlikely to have any correlation with build/cost inflation over the next year.

Getting Back to Normal

And so as I put my receipt away and contemplate the fact I could have been £14 better off, I remain confident that over the next 12 months the industry, economy, and life in general will stabilise, and I am bounded by the fact that over the next 12 months it’s prime time V10 territory, delivering much need affordable homes, with professional and dedicated RPs and main contractors in our operational patch.

Blog by:

Kieran Wakley

Head of Pre-Construction & Sustainability

V10

As I cast my eye out of the train window over on a cold and snow dusted but sunny landscape, I gather my early morning thoughts on the 2023 property market. It’s a peculiar feeling.

On the one hand I’ve seen several recessions over the last thirty-five years so I fear the worst. On the other hand my instinct tells me this will be one of those hallowed soft landings that the economists on Bloomberg frequently refer to – which I’ve never seen! Hmmm! Perhaps it’s time to looks at the facts.

Supply v Demand

Let’s start with the fundamentals. Everyone in development knows that demand (both market and need driven) exceeds supply. It seems like it always has done and always will do. It is these fundamentals which ensure the steady and substantial uptick in values during any 10 year business cycle. So, what will happen to supply and demand in 2023 in particular?

On the supply side we have already seen some volume house builders (VHBs) abandon committed land buying. They are retrenching and restructuring – bringing overheads down with redundancies and mergers. Housing production has also been adjusted downwards (since last summer actually) with sub-contractors being laid off and housing completions for 2023 being scaled down. Coupled with this the planning changes being shoehorned into the Levelling Up bill will ultimately result in a reduced number of planning consents – not in 2023 but beyond. Some housing associations however, nervous of the market and absorbing the impact of the rent cap, are likely to tailor their development programmes back– mistakenly IMO! Why? Because land buying should be easier, construction costs should peak out and they have the advantage of swapping out tenures skewed to rent to avoid the sales market curved ball (if it occurs) which the VHBs don’t! Nevertheless, the basic point is 2023 will see a reduction in actual homes being built and/or planned for and therefore less supply for this year and next.

Now on to the demand side. Well, the economy is on a knife-edge. Will it enter a technical recession? Does that matter? The main issue is, will there be mass unemployment? This is what takes substantial demand out of the housing market. If anything, the Government is trying to bring people into the workforce with appeals to the economically inactive over 50’s – early retirees. Employment is at historic highs and anecdotally businesses seem to be struggling to attract the right type of employees. Sure, higher mortgage interest rates, higher tax rates and a higher cost of living will affect housing buying but these effects will be offset by falling inflation and higher wage settlements in the months ahead. So, there will be some additional hardship to bear for some households (leading to a greater need for affordable homes) but overall, this is likely to be a pinch not a squeeze for most. The demand for housing is likely to remain strong in 2023 – all be it subdued compared with an effervescent 2022.

Sales Values

Assuming the above plays out house prices should maintain themselves for 2023 in general terms – with supply adjusting to reduced demand. Indeed, Rightmove reported just yesterday (16.01.23) that prices had risen 0.2% and 0.9% in London and nationwide respectively. For developers looking to invest, house price variations in 2023 isn’t that much of an issue. One Development Director of an RP told us last week that even if values dropped 5% in 2023 they wouldn’t be worried as by the time the development would be finished and plots released in 2025 then prices will have come back up.

Sales Rates

Well, I think the first thing to accept is that it will take longer for a property to sell in 2023 compared with 2022. Some of the VHBs have recently reported quite drastic drops in weekly sales rates for the end of 2022. This is to be expected when you consider we had three PMs, three (or was it four? – lost count) Chancellors and the Kwasikazi statement leading to all out economic turmoil with more doom and gloom forecast – it’s no wonder many buyers just froze! All that is gone now, so confidence and herd sentiment should return.

Conclusion

As I look at the photo that accompanies this blog (taken on my journey) I have to decide whether 2023 is going to go through a cold harsh winter or whether there are blue skies ahead. I look down at my Starbucks and it’s still half full – and that reflects how I feel for 2023. Sales rates will recover from the end of 2022 and sales values will be steady during 2023 (south of Birmingham) . That’s my feeling.

Comments by:

Karl Timberlake

Land & New Business Director

One of the key drivers for our business is sustainability and over the three months since joining V10 Homes, I have taken great strides in understanding what 55% pre-manufactured value (PMV) means and how it can be achieved.

Having worked for a volume partnership housebuilder delivering all affordable schemes mostly by traditional build, I must confess hearing of the 55% PMV option and the additional Homes England grant availability was alien to me. I knew about the MMC options and what can be achieved by timber frame and modular companies – having paid particular attention in the past to having windows, stairs and external cladding being factory fitted to speed up show-home delivery on schemes. What I was unaware of was the ability for these companies to have doors and linings installed, alongside pre-completed internal walls and hung doors.

Within the first month of joining V10 my colleagues introduced me to LoCal, whose factory we visited just before the end of last year. The visit gave me a better understanding of the product and what LoCal can do within the factory environment and also the benefits of this onsite. Having a huge factory with around 28 personnel on shift at a time, they can produce close to 1000 units a year that are effectively a category 2 closed panel pre-insulated timber frame unit – each externally finished in cladding, brick slips and render. The windows and linings are pre-fitted ready to be erected onsite. Within the factory they also produce pods for bathrooms/shower rooms and kitchen pods that can be installed during the build.

The key benefits:

1. Onsite Labour Reduction – Reducing the reliance on trades within a time where there is a trade and skill gap within the industry thus reducing reliance on bricklayers and the weather.
2. Programme Benefits – what would normally take between six and twelve weeks getting from slab to watertight, can take between five days and ten days. Overall programme benefits can be around ten weeks in total, as the internal trades can continue while the bricklayers are yet to start.
3. Programme Delivery Rate – While a traditionally built site can produce between 4 and 6 units a month at peak, these units can start between 6 and 8 units a month rising to 10 and 12 in peak times reducing the overall build programme duration which for all affordable sites can be instrumental in delivering much needed affordable housing, while also reducing interest payments.
4. Prelim Saving – Not only are you reducing onsite supervision hours, but other benefits such as reduced waste per plot and the overall number of skips reduced makes for a much safer and greener site.

There are a number of scenarios to achieve 55% PMV – the easiest way is:

• Pre-Cast concrete piled foundations – A category 2 closed panel timber frame system, with factory fitted external finishes, pre-installed windows and linings, and pre-hung doors and linings.

This system advocates a 57% PMV solution, provided the roof is constructed on the adjacent floor slab which is then lifted when completed.

Overall, the benefits for achieving 55% PMV on affordable sites is a driving factor for increased quality and productivity on sites, one of the issues is that surprisingly only a handful of RPs are aware of either the benefits or the additional grant from Homes England that can be applied for to help with the increased cost that this method often entails.  Better education and understanding is needed within all RPs and contractors on this approach and the overall benefits, and at V10 we are doing this site by site to meet one of our three sustainability pledges.

Comments by:

Keiran Wakley

Head of Pre-Construction & Sustainability

V10 Homes

To date I must have delivered nearly 1,000 timber frame and modular homes either onsite or within my pre-construction role, and each site presents new challenges in delivering an MMC product. Here’s a snap shot of those experiences.

Having first been introduced to timber frame back in 2016 on small-scale projects within central Cambridge, my eyes were opened to the potential future of the construction industry; how important it was if the industry wanted to survive and grow, as well as deliver much-needed homes.

That same year a modular company was set up called ILKE Homes, owned by the same investment company as Keepmoat Homes and Elliots. I was asked to manage the construction and programme of their show-homes/sales centre down in London as a test case. Having spent six weeks onsite preparing the area, two units were delivered and connected to services within an eight-hour period, and the sales centre opened two weeks later. Impressive!

Traditional v MMC

Having worked on and delivered sites via traditional, timber frame and modular construction, there are benefits to each scenario.

Traditional build suits the sales market as production can be aligned more closely to sales rates. Traditional build is especially beneficial if the site is constrained with differences in levels. Traditional build sites are often more technically challenging and therefore under-build, or steps and staggers in roof lines make it a lot easier to build traditionally than those designed into an MMC product, where adaptions are difficult to overcome and the time saving benefits of the MMC products get eroded.

My observations are that the MMC sites are generally tidier, and are easier to manage, providing the sites have been programmed according to the method of construction and the site team has delivered that product before. Having worked on a scheme that has delivered circa 90 units in a single financial year, it’s fair to say that MMC sites can also be ramped up for longer, with sustainable output between six and eight units per month. Whilst it’s never easy for the site teams, it was manageable and the ability to ramp up production, especially in the summer months, where getting roofs on for December meant a staggered and deliverable programme for oncoming trades over the subsequent six months.

My personal experience is that MMC is easier to programme and has a lot more delivery certainty, especially in areas where traditional methods may be impacted by the weather and programmes are needed to suit certain delivery for times of the year. Whereas MMC construction is less impacted by the weather or if there are time delays, they are far less prohibitive than those of traditional build methods. Programming became an invaluable tool for myself in understanding and delivering the MMC sites and allowed me to understand the differences in internal build methodologies, especially when it comes to pre-plaster inspections and general first fix works.

The ability to get MMC sites off the ground that have challenges is hugely exciting and rewarding, and makes me a huge advocate for all MMC systems which can vary so much from open to closed panel timber frame, to those of smart roofs, and pre-insulated and concreted floor slabs. All of which makes for an exciting future to our industry, especially with the Future Homes standards being introduced in 2025 as Part L 2023 changes.

Comments by: Keiran Wakley, Head of Pre-Construction & Sustainability.

When recently reflecting about my formative years as a young engineer in the house building industry, I began to recall the comfort and satisfaction of being ahead of programme with multiple foundations poured and slabs being laid. Nearly 40 years have passed since first getting my boots dirty.

Never before has the construction sector faced such unpredictable challenges to hasten an unwelcome slowdown in project starts – as world and economic obstacles create a state of flux. Indeed, construction data company Glenigan has recently reported that there has been a 48% decline in project starts since last year.

Construction risk

Contractors and their customers have been hit by unprecedented levels of cost inflation. This has sent several previously viable businesses into administration or into some form of restructuring or it has weakened their financial robustness. These events have created two fronts of risk for RP’s which require addressing more thoroughly than previously, with the focus being on contractor security and the uncertainty of future cost variations – matters which V10 are resolving.

Performance bonds are not the only safeguard

To unlock projects for our clients we carefully assess the financial standing of the contracting entities we engage with. These are not normally Tier 1 operators who I am pleased to see in the press are championing SME’s to succeed and bolster their order books demonstrating a much needed togetherness which our industry calls for right now.

As performance bonds become more pricier and difficult to obtain by SME’s, we have reached out to RP’s to consider a mixture of initiatives involving part performance bond and part enhanced retention which has been received favourably. Clients do recognise they need to be flexible to get their projects moving whilst also considering the forecasted turnover of organisations on works secured. In most instances this work is with other RPs on a monthly valuation basis guaranteeing a steady and predictable cashflow throughput as security. This is easing the acceptance of contractors from RPs financial teams and long may this bigger picture thinking prevail. We have in-fact ourselves worked collaboratively with partners on a recent project to place a cash sum in escrow with the residual security being covered by a partial bond provided by the contractor.

These times demand such innovative solutions. We are glad to see other insolvency cover providers such as Advantage are now seen as viable alternative by our clients as the £5 million cash at bank criteria imposed by others is stifling to the SME world. As long as this open mindedness continues then we should see an active time ahead.

Fixing costs and fluctuating costs

We have been encouraged how contractors and RPs have tackled the ongoing problem of rising construction costs. For us we endeavour to bring our clients a fully bottomed out delivery figure for the works. To do so it is essential to brainstorm the residual risks and to commit to any outstanding assessments or design work needed to do so. Where this level of up-front information carries a high cost then we are encouraging stakeholders to respect the merits of investing in such and to collaboratively work to that end. There is much value in taking this stance. If a project is oven-ready then it allows the contractor to be able to commit to a pretty assured site start date within a given quarter with confidence.

We are also finding when good communications arise between contractors and their supply chain then some cost certainty can prevail and the importance of this is becoming key for contractors to fix their costs up-to, in some instances, 12 months, which clients are appreciative of. Beyond this point RPs and their EAs are being very pragmatic about fluctuation clauses being inserted in JCTs. If all sides contribute on the wording of such there is generally a mutually satisfactory outcome. It’s the way it has to be at present.

Collaboration

V10 has been working together with vendors, contractors, EAs and RPs who make up the stakeholders in our land sourced package deals. Our view from the trenches is to fight these challenges with sensibility and total open collaborative methods of working. We all want to side step a slow down so let’s get on the front foot and collectively kick-start and sustain the pouring of foundations throughout 2022/2023.

The views of: John Stainton. V10’s Pre-Construction & Sustainability Director

So, we now have a new Prime Minister – the first one ever to sit on a planning committee. Maybe she shares our pain too? Is this experience good or bad news for the residential development sector?

Free Markets

It’s worth stopping for a moment to consider what a free marketeer is? What is the political philosophy that will underpin the Truss Government’s policy formation and decisions? The free market was an economic idea espoused by Adam Smith in 1776 which determines that markets work best when governments leave them alone and allow the laws of self-interest, competition and supply and demand to prevail. Looking at the prospects for the sector through the prism of supply and demand let’s consider what Truss and her supporters have been saying recently.

Supply

The standout comment from her leadership campaign was in relation to her wanting to abolish “Stalinist” housing targets issued from Whitehall. Looking at the House of Commons library briefing (click here) upon first impressions is it does indeed look like a top-down edict, especially if one cares to review the spreadsheet “housing need for figures for local authorities”. However, these figures are simply based on a new method for calculating  housing need and this is intended to push more development into the urban areas. However, by giving LA’s more control over these housing targets Truss is effectively giving wannabee councils a NIMBY’s charter. The result is that we should expect less development to be allowed in the greenfield Tory shires and more in pro-development authorities.

One interesting idea is relation to brownfield sites where it has been muted that it would be quicker and easier to obtain planning permission in those type of locations. Indeed, the concept of brownfield sites being “full-fat freeports” with tax incentives for development has been floated by her supporters. Will greenfield land be taxed more and developers of brownfield land be rewarded for the extra effort? It would make sense for the industry to have its own financial self-interest reorientated towards more brownfield development and make more of the brownfield opportunities available on each LA’s registers (click here). In this context if planning red tape and regulation can be cut all the better. This will spur supply.

Demand

Truss has also made the point that younger people are struggling to get on to the property ladder. She has talked about delivering more affordable homes on brownfield sites. She is a believer in home ownership and would therefore be a natural advocate for shared or discounted home ownership where outright ownership is not possible. You can see the dots being joined up with the supply ideas.

She has also pointed out that 50% of renters can afford a mortgage but due to the mortgage rules only 8% ever get a mortgage – so homeownership is being held back. Easing the availability of credit will unleash further demand from first time buyers thus creating the property-owning democracy craved by the right.

New Opportunities

Politically, Truss needs to curb what locals perceive as ‘over-development’ in their constituencies – hence the abolition of ‘Stalinist’ targets – a nod to the real politics of the 2021 Chesham and Amersham by-election result. Meanwhile she wants the free market to create homes for the young to own – thus enlarging the natural conservative constituency (as Thatcher did with the right to buy council houses)

Whatever new policy decisions are made it is clear the housebuilding industry and the housing association sector will need to re-orientate yet again to take advantage of the new opportunities – once the 10^th incumbent in the last 15 years is appointed to the position of Secretary of State for Levelling Up, Housing and Communities.

Comments above by

Karl Timberlake

Director – V10 Homes