homes of the future - dac beachcroft welcome...the joy of sharing plans are in for a new co-living...

01DAC BEACHCROFTHomes of the future

HOMES OF THE FUTURE

02 DAC BEACHCROFT Homes of the future 1DAC BEACHCROFTHomes of the future

INTRODUCTION A HEALTHY OPTION

Significant shifts in population distribution and responses to this will shape the emerging asset class of senior living. By 2030 20% of people in the UK will be aged over 65. However there is no more commonalityof requirements for people aged between65 and 95 than there is for those between25 and 55.

For those in the 65-75 year old bracket, men are expected to have on average 10.3 years of healthy life; for women it is 10.9. This group are also staying in work longer. In April 2019 11% of over 65’s were in employment and this is likely to increase in line with changes to the State Pension. Emerging models are becoming more sensitive to what these healthy seniors need and want. With more job opportunities in urban centres, we are likely to see more senior living accommodation in towns and cities, rather than the more traditional retirement venues of the countryside and coast.

Around 6,000 senior living units came to market last year, but estimates suggest that there is an annual demand for three to five times higher than that. In 2017/2018 three quarters of older households owned their homes outright. There is the potential for this group to release equity from their property by moving into smaller, more convenient accommodation. According to the RIBA more than a quarter of the over 55’s are considering moving home, but 49% feel that the current housing options are inadequate.

At the upper end of the market there are a growing number of developments that provide high quality amenities, some domestic assistance and fees that include all utilities and maintenance charges.

Extending provision to an intermediate market aimed at serving older people unable to afford the higher end, but not eligible for social housing, requires a supportive legal and regulatory framework which enables new models of senior living housing and a wider range of providers.

Senior living unit providers are changing their business models by offering more flexible buying options including shared ownership options, as well as rental and home ownership. These alternative buying models can help reduce the amount of stamp duty – in the current system, so reducing the penalty for older people who are downsizing. Changes to design, planning and information available to people would all also help make for more choice. Technology will be a helpful enabler in both the construction and design of these homes, to make them as safe as possible.

A greater focus on developing housing solutions for older people can bring benefits – financial, physical and mental. As an assetclass with plenty of room for expansioninvestors, developers are seeing senior living as a healthy option for them too. More seniorliving options have a sizeable impact on theoverall supply of homes and is another routefor reducing the country’s overall housingshortages.

Autumn 2019

In this short collection of views, we consider the trends that will shape housing in the mid 21st century. Demographic shifts, new technology – including driverless cars, continuing shortages of stock, materials and skills, are just some of the factors that are already having an impact. There will of course be associated legal issues, but our views here – based on 40 years of working in every part of the residential sector – are much more about the new opportunities and risks that investors and developers will be considering. As lawyers our response is to help our clients future-proof in anticipation of these changes, creating flexibility and options.

Robert Lee, PartnerHead of Residential Law, DAC Beachcroft

T: +44(0)20 7894 6408 [email protected]

Autumn 2019 / Winter 2020

With thanks to Dr Margarethe Theseira for her research into this topic for DAC Beachcroft.


INNOVATIVE RESPONSES

Two recent activities prompted some thoughts on the homes that will be built in the future – houses or apartments, rented or owned. The first was DAC Beachcroft’s involvement in judging some tech awards, which showcased some leading edge thinking for the property sector. The second was a visit to Skorba in Malta, a settlement that has seen continuous human occupation from about 5000BC – and that showcases some much older examples of ingenuity!

The Skorba homes are remarkably sophisticated; two storey dwellings with separate rooms built from the local limestone. They underline that the basic design of our homes hasn’t changed that much. This will likely remain the case for the twenty first century at least. The elements more subject to change are linked by four c’s: choice, convenience, comfort and climate.

Virtual reality is already helping developers choose and test the configuration of schemes and units off-site, ironing out problems before construction starts. Technology will facilitate the real-time collaboration of the many professionals involved in a development and it will also enable communities to more easily understand what is proposed and give their input. Virtual reality will also reach more widely into home selection and design. Future proofing and flexibility will drive innovation. When once choice might have been provided over carpets and worktop finishes, it will extend, for example. into where some internal walls can be placed, allowing occupiers to adapt the space to their particular requirements.

THE JOY OF SHARING

Plans are in for a new co-living scheme for 180 in Birmingham near the Gun Quarter. If permission is granted it would join a small, but growing number of co-living developments. Manchester was the first in the regions with Echo Street. The Collective in Old Oak Common in London went live in 2016.

The sharing of common facilities is at the heart of the co-living concept, sharing, for example, eating areas, spas, launderettes, cinemas, gardens and garages. The schemes can give a new lease of life to old office blocks and make for more affordable living in city centres. They go beyond the practical though. Co-living offers a solution to the 21st century epidemic of loneliness by bringing people together, without the slightly forced nature of the commune.

Age UK research shows 3.6m older people living alone in the UK; 2 million are over 75. More than 1 million older people say they can go for over a month without speaking to a neighbour, friend or family member. It is though a problem that goes well beyond the elderly. The Office of National Statistics reports 10% of people aged 16 to 24 were often or always alone, the highest proportion of any age group and three times higher than people aged 65 or over.

Innovators such as WeLive by WeWork with their projects in the United States and the UK’s, iQ and The Collective for example are creating new ways of living. Many schemes are focused on a particular age group or lifestyle, although Europe has more established multi generational schemes. Certainly Channel 4’s documentary, “Old Peoples Homes For 4 Year Olds” showed the benefits of coming together for both groups.

Whatever their age there are too many people in our society who, not by choice, live a life hidden from others. While the majority of new btl schemes offer light filled, smart and sparkling living spaces, they can also perpetuate the solitary nature of living alone. Corridor after corridor of closed doors can tarnish the soul; co-living schemes offer choices for those who enjoy the pleasure of engaging with others.

Spring 2019


GAME CHANGING SHIFTS

Increasingly we are hearing the sentiment that it’s the most exciting time to be in housebuilding; possibly for the last thirty years. What’s behind these enthusiastic views? Those items on our list have been emerging over the last few years, but collectively they represent a game change, whose impact is made all the greater because of an accelerated pace of take-up.

House prices: a shift from continuous growth to greater stability will require some re-examination of business models and operating practice.

Neighbourhoods not numbers: Sophisticated place-making requires greater collaboration from all parties involved. Sometimes the collaboration is formalised through joint ventures; organisations doing together what can’t be done as single entities. Associated with this shift is the change from the uniform to greater diversity of build types, more mindful of different needs, new materials and technology.

City centres: the drift to urban living is now a continual surge; not just for the young, but for families and the plus 55’s. People want the convenience, the greater access to amenities, transport and neighbours that this location brings.

BTL: There has been a societal shift in attitudes towards renting in this country. It is an increasingly positive choice for people who like the flexibility, allowing them to readily follow the work. BTL has shifted from experiment to permanent. Those owners who can find a successful formula for critical mass will be those that thrive. Alongside this is the shift from the absentee landlord to the active landlord providing a range of managed services.

Senior living: The market is recognising that there are very different degrees of old. Established models of retirement living are not working if an owned property doesn’t become an asset. There is more and more interest in btl for this market from the development and investment community.

Technology: a shift from the brainless house to the clever house. Technology is being used not just to control heating and lighting; it can learn how its occupants live and adapt services accordingly. This extends to sensing when people become ill and raising the alarm.

Construction: a shift from on site to off site. Modular build is a way of meeting time and quality targets and can also help get around labour shortages. The shift from traditional bricks and mortar is one that is learning from techniques long applied in other countries.

All this is exciting because it shows a sector that is adapting to economic and societal shifts. The sector has continued to improve the way it responds to change; listening to customer requirements more carefully and adapting more quickly. If the sector can continue to be agile and to keep on looking for innovative responses, then excitement can only grow.

Autumn 2018

Technology will also increase the speed at which we search for a property, create faster access to a wider choice of finance and automate the way both owner and occupier manage a tenancy. From the information they hold on tenants, owners will be able to suggest what property might best suit their next move, helping build loyalty and enhancing the customer experience. However with the opportunity comes the risk of data management. Owners of multiple units will also be owners of large quantities of data. The changes to data protection regulations of 2018 demand much more careful handling of personal information and recent legal cases have shown that the supervisory authorities are not afraid of flexing their enforcement and fining powers.

Space will be at a premium so changes in design will try to create the illusion of greater room. Glass, so extensively used in office construction, will become more widespread in the use of outer walls. The introduction of the outside to the inside, more green space, more sensitive and personalised temperature control – again applied in many new offices, will also come to the home. Waste water and rain drainage will be seen as commodities and will need to be collected. Less car ownership means more deliveries to the home, with consequent changes to outside storage facilities.

And when it comes to moving in, the internet of things will help speed up what are currently frustrating processes. Drones can support immediate wi-fi connection. Cableless and switchless will become the norm. Utility contracts will be more associated with the individual and less with the property, becoming more portable and transferable.

In whatever way technology changes the way our homes work, we and the Neolithic residents of Skoba, share many fundamental requirements. The concept of home as a place of security, sanctuary and somewhere to share our life as part of a community remains a constant.

Spring 2019


THE FUTURE IS MIXED

There was a time when residential was residential and retail was retail – but only for a short time, in the latter part of the 20th and early 21st century. We could see a return to the days when our high streets were a dynamic mix of shops and homes and businesses. The boardroom dramas being played out on our high streets can create a fertile environment for positive change. There are too many shops and not enough homes and empty retail outlets could provide a solution.

Cumulatively the number of CVAs and closing restaurants creates a depressing picture. At one end of the scale the percentage of empty shops in the high street stands at 24%**. Digital shopping hasn’t helped but these high levels are more frequently found in communities challenged by a toxic cocktail of problems. The gloom isn’t universal. Businesses with a good proposition, outstanding service and a considered digital strategy are expanding and thriving. At the other end of the scale the percentage of empty shops is 8%, perhaps more widely representative of a society adjusting to the reality of technology’s impact on the way we shop, and indeed the way we live.

IN TEN YEARS TIME

If Amazon has disrupted retail, and WeWork the office, what has it been for residential? It has perhaps been less about a new entrant, but rather the dynamics of supply and demand.

The UK’s housing shortage will continue to affect this current generation of young people, the potential buyers of tomorrow. This is a generation that is said to be more concerned with access than ownership. Whether that is more by choice or by circumstance, it is a fact that only a third of them are likely to be homeowners, as compared to two thirds for their parents.

These are the demographics and economics that will shape the homes they live in:

O The UK’s population will grow to 72 million, from 64 million in 2012

O Global economic growth is predicted to be slower in the second half of the century than the first, further dampening hopes of regular salary increases

O Jobs will increasingly be more about projects than promotions

O An increase in 3.5m in the over 75 age group, up to 8.5 million from 2012, will put more pressure on availability of family housing

O Location wise, rural is down and urban is up, but not London. The exodus to other UK towns and cities, according to Savills recent report, is at a five year high and for those in their 30’s the flow is up by 68% on 2012 figures

In this crowded, expensive country emerging behavioural trends point towards changed responses to the concept of home, with perhaps less emphasis on “home-making” and more on “place-making”.

Less delayed by planning requirements and infrastructure demands, institutionally or developer owned apartment buildings are a faster means of addressing shortage. The future sees a home that is more compact, with enough space to live in, but not a lot to spare. Smaller, it is less expensive to heat, which aligns with a need to “have to “respond to climate change, rather than a well-intentioned, “like to”. Home is increasingly likely to be pre-built or modular; a useful future-proofing strategy, where space can be increased or reduced, depending on family requirements. Flexibility can also be delivered through proposals to build up, rather than out. The response to home as a unit is more practical and less emotional, with a sense of well-being generated as much from the community, as from a building.

Autumn 2018


The future is rarely a revolution, more of an evolution that we see unfolding before us. The future of driving is, in many ways, already here and is a transportation shift that will have significant implications for land use.

Increased use of technology and the “gig” economy are just two manifestations of evolving approaches. Autonomous vehicles may not have yet reached the mainstream showroom, but many of us rely on two early applications – gps and self parking for example. Car ownership has been falling steadily since the late 90s and is being replaced by “pay-as-you-go” alternatives, especially by city dwellers. Mobility as a Service (Maas) is already a familiar concept that is gathering pace and will be truly transformational when it reaches the countryside. Car rental schemes and Uber are the current convenient, flexible and affordable manifestations, but change is rapid and other companies are emerging to challenge the status quo.

Our call to planners, developers, consultants and advisers is to come together to discuss how this transport evolution will affect the built environment and, in particular, the housing developments of the future.

California, quick to embrace the era of the petrol engine, is early off the blocks in its response to this new age. The San Francisco Planning Department has estimated that parking infrastructure reduces the amount of housing a land parcel can accommodate by 25%. Los Angeles is future-proofing new city developments, which have parking garages that can be quickly and easily converted to take advantage of a time when car spaces won’t be needed. And in China managed housing estates are setting up their own arrangements with transport providers to look after the particular needs of their residents.

The route back to urban living is well documented and especially marked amongst young adults. Home ownership isn’t an option for many; renting gives a useful flexibility at this stage in life. City centres mean a range of amenities, without the need for a car. Richard Pickering, Cushman & Wakefield’s Head of Futures Strategy, describes one sort of future home that is essentially just a bedroom and bathroom, with communal spaces for eating, relaxing and shared storage. Co-living is as much an emerging theme as co-working.

General Permitted Development (GPD) allows the conversion of empty offices into apartments and we are now going to see more conversion of shops into residential. Currently though it only allows a small scale response to a bigger problem. Planning permission is restricted to 150sqm cumulatively in any building – approximately

equivalent to five studio apartments. In some city centres some of these shops will also fall within designated retail areas. There is some support for flexibility from the new NPPF ; “Planning policies should recognise that residential development often plays an important role in ensuring the vitality of centres and encourage residential development on appropriate sites.”

Survival demands we adapt and work together. GPD is best applied in the context of a local plan, formulated by those with the right local knowledge and revisited regularly. And value from investment in real estate is more and more about nimble and collaborative management.

Spring 2018 **Centre for Cities

THE SHAPE OF DEVELOPMENTS TO COME


The UK response will take its own course, but in the not too distant future we will see, to some greater or lesser extent, the end of the suburban front drive and individual garage. What is the effect on the design of individual houses and the wider development layout? If autonomous vehicles are simply just dropping off their passengers, the reduced need for city centre parking could release space for more homes and green space. People can reclaim avenues and cul de sacs as the precision of driverless cars makes for a safer environment. There could be a surge in rural living, with city workers prepared to live further away from their offices, if commuting time becomes working time, in driverless cars that picks them and their neighbours up from their home.

DAC Beachcroft has had the good fortune to explore this subject with Martin Wedderburn, one of the country’s leading transportation consultants, who recommends that planners, developers and associated consultants discuss potential adapted strategies from planners and developers for urban, suburban and rural housing. It is a conversation that deserves a wide stage if the housing sector is to seize the brief moment we have to be pro-active in our response and answer the many questions posed by the development of autonomous vehicles.

Spring 2018

A SENSE OF PLACE

We supported a report from think tank Centre for Cities, “The Race For Space” that explores the competing demands for space in our city centres and puts forward some policy recommendations. The report also serves to highlight the importance of having an up to date local plan. Generally setting out the blueprint for future growth and land use; local plans specifically acknowledge the very different requirements of individual locations. Based on an understanding of the geography of the economy, they are a crucial tool in ensuring a balanced approach for the whole community, giving space a value that goes beyond its commercial worth.

Our regional city centres have experienced a significant renaissance. Young people in particular are attracted by the jobs and the urban lifestyle on offer. Space so far hasn’t been the issue it is in London, but successful cities like Manchester, Leeds and Birmingham may soon have to address some difficult planning decisions. Land use is an increasingly urgent, politically charged question.

Permitted development rights (PDR) have been part of the solution to limited space and a small way of addressing our housing shortage. It’s suitability though is more appropriate for locations than others. For some it has meant useful conversion of disused accommodation; for others wider application could cause problems for those struggling to facilitate business growth. The city centre performs three main functions; a place of production, of consumption and a place to live. It is the role of policy to find a balance for all three. PDR though means that planners lose control of how space is used.

The report is not anti PDR, but argues for a nuanced approach that allows the different dynamics of different places to be recognised. It calls for the PDR exemptions already in place, to be offered to all of the country’s largest cities.


The report also brings the green belt debate to the forefront. The protection of the green belt is an important principle, but not all green belt is of similar quality. The report calls for selected changes, for strategic release especially where the boundary is a real barrier to economic growth. It is another instance of one size not fitting all and of adaptation needing to be informed by local knowledge. And a local plan is of great benefit for controlled access and protecting against further incursion.

Devolved responsibility recognises that local communities appreciate what works best for them. Successful devolution requires sophisticated collaboration, with all authorities within an urban area deliberately planning to share the demands for residential and commercial space efficiently between them, for the benefit of all. It is local knowledge that understands a sense of place.

Spring 2018

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homes of the future - dac beachcroft welcome...the joy of sharing plans are in for a new co-living...

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