The big housing question

I have been inspired to write this blog entry following a recent episode of Panorama. The programme was all about the need for affordable housing across the UK. There was a shocking contrast of housing in London which was fraudulently being let by landlords at extortionate rates and a family of 9 in Sheffield living in a 3 bedroom house.

There are around 5 million people on the housing waiting list in the UK and it was clear that the majority of people on this waiting list have no chance of being housed. During the show, Portsmouth Council went through their own list contacting most of the people on it, informing them that there was no chance of them ever being housed by the Authority. This meant that they cut their list considerably.

The big question however, is what happens to the people who will never be housed?

We have been developing Spacehus as a potential product for this market and we have managed to get a 3 bedroom house at an all in cost of around £84k on a small development. The running costs of this house would be around £10 per week which also would go some way to address fuel poverty.

A concept image of the £84k Spacehus that could help solve the affordable housing issue

The challenge is however, encouraging RSLs to develop. I have spent the last few months talking to many RSLs, and there is not ability or desire to develop new homes. This therefore means that the market is stagnant, so as no improvement is being made in relation to the waiting list, we face the problem of it getting longer.

It seems the reasons the RSLs are reluctant to develop is that they have been familiar with the grant process and the Government is now encouraging to change models and progress with an affordable rent model, which seems to increase their risk considerably in the longer term. All the details are not clear at present and I hope that I can dig deeper to understand what the problem is and to try and find a way around the challenges and encourage take up.

It does seem however, that there is a standoff between the Government and Social Landlords, meaning that we have a growing housing crisis in the UK.

Land values continue to be unrealistic and planning continues to be challenging. Both of these are preventing private sector involvement, putting the market in stalemate.

I still remain convinced, with my entrepreneurial hat on, that there is a need for housing which is affordable to buy or rent and run. At _space group we will continue to invest in finding a solution to this problem, until we find a way of getting affordable sustainable homes delivered.

For a number of years, we at _space group we have been driven by the purpose of making life better. After watching Panorama, I am sure that if we manage to crack this problem we will definitely make life better for the family in Sheffield who are currently sleeping on the settee.

The New Homeless

It is becoming increasingly apparent to me that we have a generation of new homeless people – young people in their 20s and 30s.

Actually, homeless may be too strong a word for them, and more appropriate is ‘houseless’.

This generation are either finding it very difficult to raise the funds to buy a property or have seen the down side of taking large loans and do not wish to get a foot on the property ladder. They even have their own term – KIPPERS, or Kids in parents’ pockets.

"KIPPERS" - it doesn't just refer to a fish

I seem to come across an increasing number of young people who in this situation, still living at home with their parents and desperate to move into a place of their own. Many of these young people have not saved money because this has not been something that they felt they needed to do in the times of excess. Now they need deposits of 20-25% to get a mortgage and their ability to raise this level of cash is difficult.

At _space group we have quite a few of our team within this age bracket and I am aware of a significant number of our people who are still at home with their parents, some in relationships finding it difficult to build a future together. There are even some who are starting families and still remain in separate properties.

The "KIPPERS" are ready to leave home, but can't get on the property market

Because of the need for such a large deposit, the private rental market has become attractive to a lot of KIPPERS, even though the products on the market are not great. At one end you have low quality, bedsit-type accommodation, and at the other, expensive riverside apartments. It is the more pragmatic accommodation in the middle which we seem to be without.

I know some RSLs have identified this and are trying to feed the market, but they themselves are suffering from funding challenges. I know recently of an RSL that put such properties on the market and there were huge waiting lists from people wanting the opportunity to rent, so it is clear that the demand is out there.

At _space group, we have developed a low cost house for the social housing market within our _spacehus brand. This is within the affordable window and also has minimal running costs. We have achieved this through offsite manufacture, which has allowed us to give each hus the highest quality in airtightness and insulation.

We are currently working on producing a £99,000 house, with running costs of £10 per week. While our buildings have low energy credentials, there is something else driving the project that we think is very important – by keeping the running costs low, the money the homeowner saves can be put towards paying the mortgage.

Our plan on the £99,000 house is to work on a 15% deposit with an 85% mortgage.

We are hoping to find a funder who will work with us who will help a whole generation own a home.

These £99,000 houses would even be appropriate for market rent if we can buy land at a realistic price. In the meantime, watch this _space!

Rob.

Thinking differently about housing

I have been disturbed by the number of people, particularly young people, who are unable to find a home of their own. To me, having a place of your own is one of the most important aspects of life, but finding an affordable home in the current market is very tough as land values still remain excessive and construction is expensive and wasteful, which sends the price of a new home soaring.

For the past two years, _space group has been working hard to develop a truly affordable home. We have been working with several organisations from around the world to piece together what we feel may help. This has resulted in the creation of our own affordable home – _spacehus.

Our _spacehus brings together Swedish timber technology, an Italian heating system and Japanese photovoltaics to create structures we believe can be both affordable and low energy. However, there is clearly a sustainability problem here in that, in order to reach our goals, we have scoured the globe for innovation and quality of product! Why? Because the levels of innovation and quality abroad are simply not found in the UK at present.

One of the things we hope _spacehus will do is help to encourage our manufacturers to embrace the opportunities to develop leading edge technology for low energy living. Not only that, but we hope that our timber structures will change the stigma the British attach to pre-fabs and timber framed housing brought on by the cheap construction methods used in the 1960s and 70s. In Northern Europe, thousands of homes are built with a timber base, and as we’re able to use some of the lessons local manufacturers and designers have learnt, we can ensure that our building is made of the highest quality materials, producing an airtight structure.

Although current Government cutbacks, which have affected the HCA to the tune of £230m, make the ways in which homes can be delivered uncertain, there continues to be a housing need and we are confident that a way to deliver affordable homes for those who need them will be found.

_space group has recently submitted Planning Approval for a prototype home on our site in Newcastle. We will be testing the performance criteria of all of the _spacehus systems, as well as using it to demonstrate the power of this idea. We plan to be delivering our first commercial homes at the beginning of 2011.

Watch this _space for more news on this exciting development!