Building a Fairer Future: Tackling the Affordability Crisis in the Housing Market through Technology — CRETech London 2023
“The majority of people coming onto the social housing wait list are falling out of private rented housing.”
Thomasin Renshaw, Pocket Living
Crisis was delighted to be selected as the charity partner for CRETech London in May 2023— an event that brought together nearly 1,500 real estate professionals to network, experience and learn about how innovation and technology are transforming the built world.
Sarah Hopley Lead Venture Builder in the Venture Studio from Crisis joined this important panel on housing affordability, which was chaired by Natasha Terinova, Director at Reach UK
The other panellists included:
Bridget Wilkins, Head of Digital Citizen Engagement, Department for Levelling Up, Housing and Communities
Nathan Emerson, CEO, Propertymark
Thomasin Renshaw, Chief Development Officer, Pocket Living
The Link Between Affordable Homes and Homelessness
The issue of affordable housing has been a long-standing challenge for many governments and organisations. While the demand for homes continues to rise, the supply of affordable homes is not keeping up with the pace, leaving many people unable to secure a stable place to live.
We estimate that 340,000 new homes need to be supplied in England each year, of which 145,000 should be affordable. And we specifically need 90,000 homes every year at social rent levels in England to tackle the current backlog and keep up with demand.
Daily Express social housing analysis
As the national charity for people experiencing homelessness, Crisis is committed to accelerating an end to homelessness. In the Venture Studio we do that through entrepreneurship. We recognise that you can’t end homelessness without homes so we aim to address some of the key housing challenges through entrepreneurship, and innovative solutions. We’re excited about the huge potential of entrepreneurs, businesses, and technology to contribute to this cause.
Pressures on the Lower End of the Housing Market
There is a chronic lack of social homes in England and much of the UK, and the gap is widening. Without increased grant funding from the government there is an increasing pressure on housing associations to focus their efforts on the delivery of affordable (80% of market rate) and commercial products rather than genuinely affordable social rented housing. The barriers to delivering enough genuinely affordable social rented housing to meet need is creating increased pressure on a finite supply in the private rented sector — this only serves to push prices up and contributes to the growing affordability crisis.
As the affordability crisis deepens, the PRS is catering for the spill over from would be first-time buyers, as well as mainstream PRS consumers and people whose needs would be best met by the social rented sector. It’s a pincer effect which squeezes those on the lowest incomes out of the market altogether. Homelessness is the inevitable result.
Challenges and Innovative Approaches
The housing affordability crisis requires innovative solutions in financing. Recent statistics from Zoopla indicate that first-time buyers now require a £7.5k higher income on average to purchase a home due to rising prices since 2020. That’s a salary of £55k on average which does not reflect the majority of people living and working in the UK.
In addition, Savills have forecast that almost half of all UK first time buyers will need family money to purchase a home in the next couple of years — so what we’re creating, and the finance options available, are clearly not affordable.
Consequently, prospective homeowners are forced into longer mortgages and smaller homes to escape the burdensome rental market. It becomes evident that finding innovative solutions to alleviate pressure in the lower end of the market will benefit commercial and intermediate markets as well.
Our investment in Pfida (formerly Primary Finance), which offers a debt-free model for home ownership, is an example of a company working to address the affordability gap. They’ve developed a debt-free model for home ownership whilst also driving down deposit amounts. For their homeowners, their equity buffer model lets them use a portion of their equity to cover a rent payment, providing a backup in times of financial difficulty.
Balancing Innovation and Integration
“We need a better understanding of where issues in the housing market actually are… Part of the problem is that people in the middle market are not well understood.”
Thomasin Renshaw, Pocket Living
Although we need to develop innovative solutions to significant challenges, caution is necessary to ensure the creation of mixed communities and the genuine integration of diverse backgrounds and incomes. It is vital not to stigmatise those living in affordable homes or inadvertently encourage ghettoisation.
Additionally, securing government commitments to uplift Local Housing Allowance rates in line with CPI (at least) could attract more investment and innovation in the end of the market where it is most needed.
“The Planning system is analogue. As a consequence, developers sit on more cost… 50% of planning submissions are invalid from the moment they are uploaded and take an officer 43 minutes to analyse and send back to the developer.”
Bridget Wilkins, DLUHC
Significant opportunities exist for innovation in the additionality of new homes, spanning from land and planning to offsite construction and modern methods of construction (MMC), but we need to find ways to ensure MMC can be profitable and scalable.
“The planning systems inefficiencies actually mean it’s only possible for those who are resource rich, in terms of time and finance to engage with the process.”
Thomasin Renshaw, Pocket Living
Moreover, the construction industry is grappling with a skills shortage that affects the timely delivery of new homes. The Government’s Employer Skills Survey in 2019 found that skills shortages accounted for 36% of all construction vacancies and 48% of all manufacturing and skilled trades vacancies. By leveraging technology and automation, we can bridge this gap, allowing professionals to focus on the human-to-human aspects and quality control.
That’s why we’ve invested in Agile Homes, who are building high quality, low carbon affordable modular homes in new and innovative ways. They focus on developing on land ‘hidden in plain sight’, unlocking value and delivering much needed new homes quickly.
Best Practice and Promising Initiatives
It’s encouraging to witness the emergence of a Proptech for Good ecosystem that extends beyond climate change, keeping affordability on people’s radars.
To tackle this challenge, we have recently announced our partnership with Homes for Good to launch a lettings agency in London. This initiative will support individuals exiting an experience of homelessness or people on low incomes into the private rented sector, while working across the entire market.
In addition, our investment in Bridge Housing Solutions is a prime example of leveraging technology in the social renting space. And we’re also big fans of the work of Ian Wright and Jenny Danson at the Disruptive Innovators Network who are doing great work to make technology accessible for the social housing sector.
Homelessness is not inevitable; we know it can be ended. To ensure we have the right number of homes, at the right affordability level in the right places, more innovation is needed. While we wait for a cross-party 15–20-year plan on housing delivery, we can’t wait to meet more of you with bold and ambitious ideas!
Thank you
We want to say a huge thank you to CRETech London for inviting us to be Charity Partner for the event this year. We loved expanding our network, meeting with new and familiar people at the event to discuss how we can work together to tackle homelessness. We’re really looking forward to continuing these conversations over the coming months.
We’re actively fundraising for our £20million philanthropic venture fund. If you’d like to know more about our work and how to support it, please reach out to sarah.hopley@crisis.org.uk
