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True political support, a change of perspective on the benefits of renting, and reform of planning are crucial before alternative residential can really become mainstream


Written on 7 May 2020

Alternative Residential housing schemes including build to rent, student accommodation, co-living and senior living, are unlikely to contribute to a significant increase in the housing supply unless government makes planning reforms, different demographics across society fully embrace it as an attractive living option, and investors and lenders take a longer term view on returns.

The findings are included in law firm Osborne Clarke’s Alternative Residential report – ‘Transforming the way we live’. The report is the first in the UK which takes a holistic view of the sector following interviews with leading players including developers, investors, housing associations and real estate and planning advisers.

Alternative Residential broadly includes four types of professionally managed rental housing – student accommodation, build to rent (BTR), co-living and senior living.

Student accommodation has paved the way for this sector, with BTR also rapidly gaining momentum over the past few years. Investors are increasingly viewing these assets as a valuable part of a healthy portfolio of mixed residential stock.

BTR, co-living and senior living housing schemes have largely been imported from countries such as the United States and Germany. In these countries they are now accepted by local government, by investors and banks, and by society at large as successful solutions that can help meet local housing targets and as popular options for individuals and families.

The UK government’s target of building 300,000 homes a year was always ambitious despite concerted efforts to stimulate demand through financing options such as Help To Buy, through local housing targets, and through the easing of some planning restrictions such as the conversion of office buildings to housing. Even with those incentives, the ability to buy your own home has become increasingly difficult for many, and renting, as a long-term option, has been rising to the challenge to bridge that gap for a variety of demographics and people at different stages of life.

Anastasia Gorokhova, Partner in Osborne Clarke’s real estate team, comments: “Alternative Residential schemes have the potential to provide a significant injection of homes into the housing supply. They offer new models of connected and shared living which directly appeal to younger people and which have an established track record elsewhere in the world. Senior living schemes are now being developed with onsite care and dedicated facilities but we are a long way behind other countries.”

 Osborne Clarke’s report suggests that there are ten conditions that will need to be met before Alternative Residential can truly shift into the mainstream in the UK. Importantly, many of these are the responsibility of the industry itself; it can’t only blame external factors.

External factors of macro change are:

  1. A recalibrated planning system (including no inbuilt bias for build to sell)
  2. Bridging the skills and capacity gap (including more construction tech and modular buildings)
  3. Finance (including new valuation models and changes to the tax regime)
  4. Social and political change (including incentives to encourage life-long renting)

Internal factors or deliverables from the Alternative Residential market:

  1. An investment that stacks up (including higher density building that balances amenities vs rents)
  2. A sense of home (sites must be designed to maximise community and wellbeing)
  3. Built for beauty and sustainability (a drive for decarbonisation must be reflected in design and operation)
  4. Quality (success will be determined by user satisfaction)
  5. Smart buildings (tech is the enable of many services and frictionless living will become more important)
  6. Brand or location (location remains important but brand is increasingly recognised by both younger and older segments of the market with WeWork and other commercial brands providing a useful template)

For more commentary or to speak to a lawyer about these trends, please contact:

Chris Bond, PR manager, Osborne Clarke at chris.bond@osborneclarke.com or on 020 7105 7886 / 07467 337 032.

Spokespeople for this report are Anastasia Gorokhova and Conrad Davies

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Conrad Davies

Partner, International Sector Leader, Real Estate and Infrastructure, UK

T +44 117 917 3216

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