Zero inflation: How does it affect land investment and the housing sector?

Deflation can sound good to consumers’ ears, but it also alters economies and investment decisions. UK deflation is new and housing investors need to pay heed.

The UK is in a stage of exceptionally low inflation - even deflation in some sectors - which any student of macroeconomics knows has its pluses and minuses. Consumers love paying lower energy bills, but some businesses suffer if they have to cut prices to attract buyers. Borrowers suffer if they are paying back on debt incurred when prices were higher.

Investors in new home building might take notice as well. For example, capital growth land opportunities provide individuals and institutions a means to participate in the high demand for housing - finding UK land that can be converted to housing (with council approvals) and establishing homes where the local economy needs them.

But with all the moving parts of the UK economy, within the context of global economic shifts (petroleum pricing among them), where to apply money and capital is a question that isn’t easily answered. These publications have offered some perspective in 2015:

FT.com - The Financial Times’ online “UK economy at a glance” provides a rundown on more than a dozen economic indicators, including both inflation (at -0.1% as of October 2015) and the housing market. The annualised house price rise that month across the country was 6.1%, but 5% when factoring out London and the South East. Relative to inflation, the paper’s economists note, “Exceptionally low inflation, driven largely by falling oil prices, supermarket price wars and the strength of sterling keeping down the costs of imports, has been a boom for household finances.” It cites the Bank of England’s prognostication that very low/zero inflation is due to “external factors” and not indicative of a looming deflationary spiral. Relative to home buying, “the value of mortgage lending also rose by the largest amount in almost seven years,” with 69,300 mortgage approvals in October 2015, perhaps due to demand that was held back earlier in the year during the lead up to the national election.

The Telegraph - The paper’s property correspondent interviewed economists on how a deflationary cycle might affect housing prices. Making distinctions between “good” and “bad” deflation, the head of JLL residential research says a bad cycle could include flat or falling house prices. The impact could be a cooling of transactions because existing homeowners won’t feel comfortable about trading up; if they do anyway, with lower proceeds from the sale of their old home their deposits will be smaller, forcing some to accept a higher loan-to-value mortgage on their new home. “Would you buy if you think prices are going to go lower?” posed the researcher. “Homeowners like buying into a rising market.” But this would require a “sustained and persistent” deflation cycle, which he says is not yet evident.

PricedOut.org.uk - This advocacy group campaigning for affordable house prices says that “nearly 3.5 million private renters are unable to afford the average house and this number will increase further if house prices continue to rise faster than wages.” Citing how the average cost of houses is seven times that of average income, it points out how rising home prices have a perverse inflationary effect: “Rising house prices hinder the ability to build enough houses because it increases the market value of land, thereby increasing costs to the developers ... attract[ing] more speculators to the housing market as ... it makes houses more expensive.” The proposed solution is to set a target of zero per cent house price inflation, levy a higher rate of capital gains tax on property (to make speculative buying less attractive), liberalising planning policies, and otherwise encourage a zero-per cent house price inflation rate.

So regardless of whether you invest in market-traded securities or alternative investments such as land, house building, antiques or commodities, there is this unusual dynamic of very low inflation and perhaps deflation to consider.

But the chief property economist at Capital Economics, the independent macroeconomic research firm, told FT.com that the shortage of homes for sale causes an “upward momentum” defined by tight competition by more buyers chasing after too-few homes. For the most part, that’s what capital growth investors look for in alternatives to securities.

No investor can be expected to understand the many interrelated factors of any economy, deflationary or inflationary. This is why third party advice from an independent financial advisor is almost always recommended.

Will Privatization of Public Housing Ease the Housing Shortage?

Several Government changes relative to housing associations suggest they will cease to deliver homes as needed. Private investors might be the only builders.

Several significant factors in the UK housing association sector have cast doubt on whether the growing need for housing would be abated. Indeed, these factors suggest this need will not be met if trends continue.

The Government’s abdication from supporting housing associations comes at a time when private investors’ interest in house building is growing. Alternatively, from the private sector, real asset funds seek land where it can be acquired and where planning authorities will allow for building. This is where standard supply-demand dynamics play well: with high demand come higher real returns to those funds.

But at the lower end of the market, lower income families are seeing diminishing opportunities to find housing. Consider what has happened in 2015 alone:

• In October, the Office for National Statistics reclassified housing associations as non-financial public corporations. This effectively places £60 billion of privately procured housing association debt on the Government’s balance sheet. Observers speculate Chancellor George Osborne will then try to get this debt off the public books by selling it to private investors, or remove regulator burdens on housing associations that in effect enable them to become commercial property companies - setting rents as they wish. Note that Germany’s experience with privatisation (selling to large investors that included Vonovia, Fortress and Cerberus) resulted in one million fewer social dwellings and an overall increase in housing prices.

• A few months ago, Chancellor Osborne surprised many with a forced rent cut of 1% on housing associations, in contrast to the 1% increase plus inflation as they expected. Subsequently, a survey of providers by the Homes and Communities Agency found that the associations curtailed investment plans by about £1 billion for 2015, believed to be a consequence of this rent cut. This decrease is spread across more than 200 landlords, not due to a single large drop in individual plans.

• One of London’s largest housing associations - Genesis, which owns and manages 33,000 homes in the city and the South East - announced in August it would discontinue building social housing. Contributing to this, according to an article in The Guardian, were the Government’s decision in 2010 to cut funding for social homes by 60%, and welfare reforms that reduced tenants’ ability to pay rent.

To the dismay of social housing advocates, Genesis will build homes for sale and rent at full market rates. Real asset investing of this nature is considered mission creep in that the profits from market-rate building are ostensibly targeted at subsidising social-rent dwellings. But the extent to which organisations such as Genesis go into for-profit building is an unanswered question.

Without question, new homes are needed in the UK. Private investors are keen to enter real estate as an asset-growing opportunity, which it indeed is. But as the housing charity Shelter points out, the housing shortage at all price levels is affecting both the middle and lower classes equally. Buyers are favoured by such programmes as Right to Buy, Help to Buy and Starter Homes initiatives. But the experience in some European countries has been many owners lack the wherewithal to maintain the homes they own. Instead of appreciating value, large percentages of dwellings fall into disrepair and become an asset that is hard to sell.

Those keen on investing in UK land and building should consider it as any other asset class: a balance of risk and reward is uncertain. An independent financial advisor should be able to counsel the investor in how to identify manageable risk. 

WikiHouses: What Might They Do to Alleviate the UK's Housing Shortage?

At a remarkably low cost and buildable in mere days, these energy-efficient structures might help England to build more homes faster.

There is a big idea out there called WikiHouses, and it might just be one of the key solutions to the UK housing shortage. Notably, the design-build movement is rooted in England but it’s already being tested around the globe.

A WikiHouse is essentially a flat-pack-like kit that combines 3-D printing with a very democratised, open-source approach to architecture and construction. Its progenitor, Alastair Parvin of Zero Zero Architects (Hackney, London), speaks of it as the solution for the masses, a self-build method that might make housing affordable. Which, given the high cost of housing and the inadequate supply of homes, makes the method worthy of examination.

It also might make the short list of creative concepts worth investigating for individuals engaged in UK land investing. If housing delivery in a short period of time is critical, this method offers something rather extraordinary: Single-day construction of a two-bedroom, 68-square-metre wooden frame house, at a cost of about £50,000. The construction “crew” need not even be professionals, as amateurs or volunteers can do it if, in the words of Parvin, they are “IKEA-savvy.”

The Wiki design concept is open-source, meaning designs are essentially free online and open to variation provided by anyone generous enough to do so - essentially doing for simple home designs what Wikipedia did for encyclopaedic knowledge. The design program cuts building parts - much of it orientated strand board (OSB) - with a computer numerical control (CNC) machine. As this can be done locally, where a CNC exists, the materials are less expensive because there is less transport required. And this is part of the building’s sustainability story. WikiHouses can be built to high performance standards, even to qualify as “net zero energy use” Passive House requirements.

The South Yorkshire Housing Association announced in late 2015 it would build a pilot home with the method in 2016. Should the pilot project prove successful, the association said it may enable them to affordably replace homes sold under the Right to Buy programme where low-value land areas make it otherwise an economic challenge.

Investing in UK strategic land typically involves buying the land from non-builders, for example farmers or public owners. Investors then will seek a zoning change from the local planning authorities to build, although increasingly that means selling the lots to homebuilders. The WikiHouse concept would radically change the homebuilding process, but it’s not inconceivable that the speed and lower-level of investment could compel investors to test the concept. Alternatively, an individual could purchase the land to do self-build – assuming they are “IKEA-savvy.”

The Guardian considered the WikiHouse option in an article in 2014, suggesting that land availability and cost would be the biggest barriers - particularly in densely-built London. But it went on to suggest constructing these buildings on top of existing buildings, which by law may be possible. A spokesperson for Sustainable Homes, a not-for-profit consultancy, noted that post-war pre-fab buildings were similar in concept and suffered from poor energy performance. But much has changed in the 60+ years that have passed such that those concerns may be unnecessary. WikiHouse proponents emphasise how the open-source nature will provide for innovation and adaptation to different situations, climates and design interests.

Investors in housing are by nature innovative. Every site is different and every market needs different kinds of homes to meet local demand. Meanwhile, homebuyers want quality homes that can enhance their lives and build value over time. But every investor should consider all variables relative to the house-building opportunities in the UK - an independent financial advisor is the first place to go to consider the options.

RICS New Buyer Enquiries Outpace Housing Inventory, Driving Up 2016 Prices

With a growing population all of England is awash in house hunters. As prices climb, investors see opportunity in the Capital City and beyond.

What’s in store for house prices in the UK for 2016? A continued rise is most likely, according to the Royal Institute of Chartered Surveyors (RICS).

While this may be difficult news for would be first-time home buyers - a population of a million households, possibly more - it at least should be sufficient to stimulate investor participation in alternative investment funds such as those that are focused on increasing the housing stock. Demand has not abated for housing in London as well as all of England and Wales and parts of Scotland and Northern Ireland. To build is, in simplest terms, to sell – and achieve asset growth.

RICS reported some slowed growth in house sales going into the fourth quarter of 2015, but also pointed out that the number of properties coming onto the market is slower than sales. This is thought due in part to would-be sellers holding back from putting their existing homes on the market because they are worried about finding suitable housing to buy. A RICS survey found that 40 per cent of respondents felt the biggest factor influencing them was the lack of houses for sale, followed by 12 per cent of survey participants saying that economic uncertainty held them back as well. RICS says that as demand continues to overstretch supply, house prices will continue to rise.

On the plus side, lending stringency has not prevented banks from providing more loans. This in turn increases the number of buyers.

Investors working through capital growth funds are looking to satisfy this market with more building. These financiers seek out housing shortages wherever they might exist to determine where the most profitable land-to-houses conversions can be made. This gambles on getting council approvals, but most funds managers are adept at knowing where local planning authorities will welcome development. With the critical shortage of housing now, those approved plans are more likely.

The Telegraph published a list of places where property investment might find the best values and asset growth (and where alternative funds might also be at work, as London-centric thinking is behind the times for investors). Those places are Truro, Cornwall; North Oxford, Oxfordshire; East Manchester; Shenfield, Essex; Bruton, Somerset; Reigate, Surrey; Norwich, Norfolk; Richmond, North Yorkshire; Biggleswade, Befordshire; Winchester, Hampshire; Sevenoaks, Kent; Henley, Oxfordshire; St Albans, Hertfordshire; Jesmond, Newcastle; Worcester, Worcestershire; Maldenhead, Berkshire; Bosham, West Sussex; Silverstone, Northants; Bristol; and Cambridge, Cambridgeshire.

And the opportunities for making money on housing aren’t limited to those places. The housing shortage will continue for a decade or longer. Capital applied to building homes begins with the acquisition of land, be it greenfield or brownfield. Localism in planning has been successful to some degree, and recent statements from the Cameron Government have made clear that all areas of the country need to plan for growth in housing to match growth in population.

Investors should go about all opportunities in land and other investments with caution. The advice of an independent financial advisor can help individuals and families to navigate the complex choices.

Inside Housing's top Sustainable Developments 2015: Green Design Characteristics

Developers and housing associations are working on new ways to build high performance buildings that are affordable. Here are some winners.

In the UK a mixed picture of the importance of sustainably designed homes is emerging. Prime Minister David Cameron relaxed requirements in 2015 for achieving certain green goals, such as when he scrapped the Code for Sustainable Homes in 2014 and cut off Government financing of the Green Deal Finance Company, which issued loans to homeowners who were insulating their homes with the money.

But builders in the private sector, as well as the quasi-public housing associations, have nonetheless embraced green building. This is due in some respects to a sense of social responsibility on the part of developers, owners and occupants. Investors engaged in joint venture property funds recognize that homes above a certain price necessarily need to be high-performance, energy-efficient structures, situated in low-impact zones that provide habitat for natural flora and fauna. And, there remains value in providing new homes to UK buyers and renters who want lower energy expenses and the sense that their homes are green.

So the magazine of record regarding homebuilding in the UK, InsideHousing.co.uk, included “sustainable developments” as a category in its annual “Top 60” review of exemplary developments in 2015. So for homebuyers, developers, property fund management firms, local councils and housing and environmental advocates, we think it worthwhile to consider the winning characteristics of six selected ventures into exemplary green building:

Bath Riverside - At a cost of £500 million, the approximately 2,000 homes in this repurposing of an abandoned crane manufacturing plant on the River Avon are accompanied by a new park, primary school, surgery, cafes and restaurants. About 25% of the homes are affordable housing (of which 70% are social and 30% shared ownership). Rated at a Level 4 in the Code for Sustainable Homes, these individual units are each equipped with a smart meter, A-rated appliances, and water butts that limit consumption. Residents can use collected rainwater on fruit and herb gardens.

Eco Terrace - An international design competition, sponsored by the developer (Radian Housing Group), found London architects Cany Ash and Robert Sakula who created this three-home development. Built at a cost of £655,000, the structures include solar panels, heat-recovery ventilation, an emphasis on natural daylighting, and chestnut shingles on rooves that provide for bat roosts and bird nesting sites. Each of the attached homes has small courtyard gardens, recycling capabilities and cyclist storage.

Glasgow 2014 Athletes’ Village - Orchestrated by Glasgow City Council with a consortium of four house builders, this 700-home development plus a 120-bed care home was built for £150 million. First used by athletes during the Commonwealth Games, the structures have a district heating system from a combined heat and power plant. Off-site manufactured building components enabled affordable and extraordinary insulation that led to the development achieving the BREEAM Ecohomes standard (“Excellent” level). 400 of the homes are available for social rent.

Hanham Hall - This Bristol development won the category. Built at a cost of £38 million, it is England’s first large-scale zero-carbon development and is situated on the site of a former NHS hospital. The developer - Sovereign Housing Association working with Barratt Homes - found the zero carbon goal to be technically challenging. Priority was given to public green spaces within its urban environment. Of 185 homes planned, 122 are private Barratt homes and 54 social rent owned by Sovereign Housing Association - a working joint venture with many success points.

Passive Close - Built to Passive House (“Passivhaus”) standards, the 51 timber frame homes in this £10 million development were manufactured in a Swedish factory. Features include breather membranes, insulation and plasterboard, triple-glazed windows and doors pre-built offsite - which cost less and enable faster construction. Building heat comes from solar collectors as well as electrical appliances in each home (via heat recovery systems) - and no traditional heating system. Residents of this all-affordable development are trained in how to make the most of the hyper-efficient energy system.

Erneley Close - Another Passive House development, this is a retrofit of a 1960s maisonettes’ building in Longsight, Manchester that cost just £3 million to bring 32 homes to the required standard. Occupants generate heat, 95% of which a mechanical ventilation heat recovery system is able to capture. One resident reported using fan heaters only once.

Property fund management companies look for opportunities to convert land to development, all of which can be developed to green standards and even Passive House criteria. Sometimes there are existing buildings that can be recycled responsibly, but most development needed in the UK involves the construction of new homes altogether. What these projects, a combination of new builds and retrofits, tell us is that high-performance, earth-friendly homes are popular in all price points.

Investors in real asset funds and other types of property should go about it with a sense of social responsibility and environmental consciousness. But a return on investment is a matter of sustainability as well. Speak with an independent financial advisor to learn more about where to invest.

Inside Housing's Top Non-Grant Funded Developments 2015: Characteristics of privately-financed housing

The cessation of Government funding for affordable housing has proved challenging, but partnerships and cross-subsidisation are helping fill the gaps.

If there is a term for non grant-funded affordable home development, it would be partnerships. This is because it takes a team, a set of partners, to provide subsidised housing without subsidies from the Government.

The executive editor of Inside Housing, Nick Duxbury, explains that this category of the magazine’s annual review of exemplary building is all about being resourceful without funding that was slashed by the previous coalition regime (grant funding was cut by 60%). The solution for social landlords and housing associations was to raise funds in other ways, quite often by selling some homes for market sale and reinvesting profits into affordable homes.

To some degree, this is similar to building in the fully private sector. For example, strategic land developers take some risk on buying UK land that may or may not achieve planning authority approval for development. With those approvals, a very profitable development might result. And those developments need to provide for some social good in the form of infrastructure funding.

Social developers demonstrate their own strategic development skills through the named honorees of Inside Housing’s 2015 list:

Windsor Avenue - The partners in this project in Peterborough were a private developer (Westleigh Homes), which built 22 of the homes on the site, and L&H Homes, a housing association that developed 85 of the homes. Intermediate rent is charged on 33 homes, 13 are in shared ownership agreements, 12 deferred equity and 27 are at market rent. Cost of the development was £10 million, supplemented by a £250 million bond and additional £230,000 in a capital fund grant from Peterborough City Council.

Chyvelah Close - Situated in Chyvelah Close in the village of Threemilestone, Cornwall, the scheme of 21 homes were built at a cost of £770,500. The scheme was made affordable by 14 of the homes sold at open market rates, four at affordable rent and three in shared ownership. Special attention was made in construction by use of surface materials that protect the roots of a mature hedgerow, which creates a privacy screen from neighboring properties.

Fullbourn Phase 2b - At a cost of £11 million, the 79 homes of this development were funded by Accent Group, a 19,000-home housing association that generates receipts through market sale and shared ownership properties. Fully 46 of these homes were sold at market prices and another 13 in shared ownership, with 19 occupied in social rent and one in a Right to Buy reprovision.

Lygon Court and Post Office - The Merlin Housing Society built this 3-home development in Cromhall, rural South Gloucestershire, for £630,000. It preserves a post office and village shop, considered a community amenity. This compelled South Gloucestershire Council to provide £100,000 of funding and essentially donate the land to the society. The three homes bring the village’s social housing properties up to 21, still a small percentage of the village where the number of households is 279.

Newbury Racecourse - On a much larger scale, there will be 1,500 new homes built here in ten years, of which 421 are already built, 87 of which are social rent and 40 shared ownership. The site is at a major sporting venue (Newbury Racecourse) and the cost for this first phase of homes is £324 million.

Railton Place - Earning top honours in the category, the 48 homes in this scheme were evenly split between homes for social rent and those in shared ownership. This is quite an achievement in one of the most expensive postcodes (Weybridge, Surrey) in the UK. It was designed by Paragon Housing in partnership with Brooklands Museum Trust and English Heritage. The property includes a unique feature: the restored Competitors Tunnel, where race car drivers would enter the historic Brooklands racetrack, adjacent to the property.

Land fund partners can work with housing associations or completely within the market rate sector. Each of these developments indicates how the hybrid of various financial structures - affordable rental, shared ownership, market rents and market ownership - are possible.

Investors need to consider all options and use of an independent financial advisor can help facilitate that. The real property investment sector is particularly interesting both because of the opportunities for asset growth, and also because of the unlimited creativity and variety that housing, sites and financing allow.

Inside Housing's Top Market Sale Developments 2015: Characteristics of Exemplary Building

Housing associations and others are innovating on how to build social and market-rate homes together. Some of the best examples are profiled here.

Perhaps the silver lining of England’s housing crisis is how the need for more homes stimulates brilliant creativity. This comes from responsible council leaders, from architects, from housing associations and from those who finance all of the above.

Inside Housing, a periodical found online (InsideHousing.co.uk) has undertaken a review of creative developments from the previous year and compiled them into their “Top 60” list. Broken into ten categories, this article looks at their choices for market sale developments, which in most cases are social landlords who elect to develop for outright market sale, the proceeds from which cross-subsidise additional affordable development.

Those sources of financing - for example joint venture partnerships of land and housing developments - should take note. These are schemes that are reinventing concepts of how we live in the different phases of life. Several but not all of the highlighted developments below are in house-starved London, illustrating how affordable living can be achieved at a time and place when many believe it not possible. These are successful ventures as well, as the sales information indicates.

The selected homes developments in this market-sale category of excellence are:

Wandsworth (South London) - This 139-home development called The Schoolyard repurposes a bus depot that had previously been a school. Properties were divided into flats for private sale (119) and shared ownership (20), with one-bedroom apartments selling for £335,000 on up to £850,000 for three-bedroom apartments. These are priced for first-time buyer accessibility. A goal of the housing association was to sell to local purchasers, which proved to be the case in 95% of sales.

In London, the price of land is very often a barrier to affordable development. Strategic land partnerships consequently target cities and towns outside of London for higher returns on assets, but this development provides evidence that successful development on a not-for-dividend basis in the Capital City is still feasible.

Bourne, Lincolnshire - It is evident the movement to provide housing to healthy aging adults is picking up steam with The Croft Developments, 124 homes that are villas, bungalows and chalet bungalows. Owned by 55+ residents, they are strategically priced to be affordable to local buyers who do not want the demands of property maintenance and yet can appreciate landscaped courtyards and gardens.

Barkingside, East London - With a village green that recalls a predecessor development of homes built for a children’s charity, these 144 flats and houses (Barnardo’s Garden Village) also were designed to satisfy a mission to be affordable to local people. A senior policy officer from the British Property Federation pointed out that the sponsoring organisation, Barnardo’s, had never before functioned as a developer. The new houses replaced derelict buildings.

Hamworthy, Borough of Poole - The local authority accepted a lower price for the land it sold to the developer, a partnership that enabled building Old School Place to code for Sustainable Homes Level 4. The 30 units were built for £3.5 million, nine of which were open market sales, five made available for shared ownership and 16 are in the affordable rent category. Solar energy and mechanical ventilation heat recovery systems enabled the development to achieve its green status (bearing evidence that eco-features are possible even in an affordable housing context).

Coventry - While tiny (11 detached and semi-detached homes), Draycote Grange was built on derelict property by a partnership between social landlord WM Housing Group and its subsidiary Signature New Homes. This development cost £1.7 million and preserved an ancient hedgerow and an existing mature oak tree.

East London - What distinguish this 120-home development, Gunmakers Wharf, are the vegetated roofs that provide habitat to flora and fauna and reduce stormwater run off. Thirty of the units are offered for social rent, while 72 were sold at market-rate prices and 15 at market rent. NOTE: This development took first place in this category; according to judges, it won because it provides mixed-tenure housing and was contextually designed to be cohesive with warehouse buildings in its district. The developers also took a narrow canalside (Herford Union Canal) walkway and widened it, benefiting residents and the surrounding community by providing a pedestrian path into Victoria Park.

Social landlords and housing associations operate with different taxation and other infra-support requirements than do for-dividend developers. That said, these hybrids of social and market-rate developments show there is a market of buyers for whom the mix is not problematic.

Investors in real assets such as land and housing have many opportunities for satisfying the demand for homes in the UK. But the smart investor first seeks the counsel of an independent financial advisor.

Inside Housing's Joint Venture Developments 2015: Exemplary private-public investments in new homes

Cooperation is the key to building much-needed new residences in the UK. Most of these developments are a mix of market rate and affordable homes.

In a complex world, the most likely way to succeed at anything is to engage multiple parties working toward a singular goal. In a business and development context this is called a joint venture. And perhaps where it comes to meaningfully increasing the supply of housing in the UK, joint ventures between local councils, developers, investors, housing associations and others are increasingly important.

Participants in land investment funds understand this. They apply capital and know-how to identify land where homes might be built. They work with local planning authorities and existing communities to identify how new homes and new residences can enhance a local economy, bring new investment, as well as increasing and often modernising the local infrastructure. They also very often work with homebuilders, selling plots of land for those firms to build on as they see fit. Each works together to the common goal of increasing land values and helping communities improve and expand their housing stock.

InsideHousing.co.uk published descriptions of exemplary housing projects in its annual showcase titled: “Top 60: Joint Venture Developments of the Year. In this category, the five finalists were selected for bringing creative solutions, “ones which bring organisations together to capitalise on their relative strengths and which allow partners to achieve more together than is possible alone,” according to the magazine’s editor.

Cumulatively, the following five joint venture developments added 6,295 homes to the nation’s inventory in that vein:

Laurieston Living (Glasgow) - With up to 1,000 homes in total, the second phase of this project delivered 69 homes for sale at market prices and 39 in the mid-market rent range. Artwork used throughout the site is a collaboration of an established artist working with young local artists in a mentorship programme. The joint partnership includes Glasgow City Council, a housing association, the Scottish Government and Urban Union, which is a joint venture of two construction companies.

Northfield Village Phase 1 (Birmingham) - The end result is an aging-in-place apartment building with 80 residences, a women’s refuge, a specialised care facility for people with dementia, plus nine affordable-rent homes for “people with a local connection,” plus a commercial section that includes a café, restaurant, bar, shops and an occupational health accommodation. The joint venture partners were the National Health Service, the Wrekin Housing Trust and the local council housing authorities. This project ultimately won top honors for its category, in part because a “community hub” that brings residents together with the wider community is believed to create a healthier, more socially integrated community overall. The building and landscape scheme were also judged to be attractive and well designed.

Sheffield Housing Company (South Yorkshire) - Sheffield City Council has partnered with private developers Great Places Housing Group with financing from Keepmoat, with the ambitious goal of adding 2,300 homes in the next 15 years. Of 293 homes built thus far, 70 are available at affordable rent and 223 are for market sale. Of note: the participating partners in this £295 million first-phase development will share in its profits.

Evolution Gateshead (Tyne and Wear) - The Gateshead Regeneration Partnership - Gateshead Council, Home Group and Galliford Try Partnerships North East, one of the UK’s leading house building and construction groups - plan to develop 2,400 new homes on 19 sites over 15 years. Of the first 318 homes built, 37 are affordable rent, 18 shared ownership and the remainder offered at market rates.

While many investors think all the action in development is in London and the South East, this North East development shows that UK land investment are wise to look elsewhere. Enterprise zones are established in the region, which promote low carbon vehicle development, marine offshore and subsea engineering, petrochemicals and renewable energy. Gateshead College has the Future Technology Centre, which invests in research and development to create new products, learning experiences and sustainable employment.

243 Ealing Road (London) - Housebuilder Hill entered a joint venture with Network Living to construct 441 homes for £110 million on a canalside site (a brownfield tract that formerly served as a warehouse). 254 of the homes were offered for outright sale, with the remainder in shared ownership, shared equity, Rent to Buy, and affordable rent. According to the editors, the partnership devised a clever strategy: “off-plan sales allowed the partners to speed up the construction programme to meet demand 18 months ahead of schedule.”

In each project, the sum of the total is arguably greater than its parts - councils, charities and builders worked with disused land or derelict structures to find a way to make the investments from each worthwhile and productive.

It’s never possible to know how an investment will return growth (or not) on assets. But a smart investor will always engage an independent financial advisor to help guide them through the many options - determining which pose the best risk-reward scenarios relative to the investor’s full portfolio.

Inside Housing's Best Designed Developments 2015: Distinguishing Characteristics of Innovative Design

Multi-unit housing offers as many design challenges as detached houses. But all developments have site-specific challenges; the ideas are interchangeable.

While the concerns over how the UK’s population increase is exacerbating the shortage of homes, there are reasons to be hopeful about how architects, builders, developers and housing associations are responding to the needs. A good showcase of how that is happening is InsideHousing.co.uk’s review of exemplary design innovation for homes built in the past year.

These are all multi-unit structures, although many are sold or rented at market rates. There are lessons in each that can also inform the detached homes builders as well as managers of property funds who identify where such homes can and should be built (of note, it’s the land and location where development takes place that are among the most critically influential factors in architecture - and a key application of investors’ funds).

These are the finalists and winner in the design category for 2015:

Mint Street, Bethnal Green (London) - Of the 67 homes in this repurposed carpark, 23 are at market rent, with the others available at social rent (27 homes) and shared ownership (17 homes). From a design standpoint the judges noted the development overcame close proximity to a railway by placing bedrooms on the opposite side of the building and the use of landscaping as a buffer.

What can detached homebuilders take away from this? Landscape can be a very useful tool in mitigating noise and visual pollution. This development is in close proximity to overground and underground stations, a plus for working commuters but sometimes the reason land is lower-priced because it adjoins noisy transit.

Abode at Great Kneighton (Trumpington, Cambridge) - Judges cite this 308-home development (with two-, four- and five-bedroom houses and flats) for achieving a “village setting within a vibrant mixed-use community.” Sixty per cent of the dwellings are market rate and 16 per cent are shared ownership. Accommodations for physically and visually impaired people are incorporated into the design.

What can detached homebuilders take away from this? The sense of community, aided by a heterogeneous mixed-use design, makes the individual homes more attractive. Inhabitants want to be out and about meeting neighbours and making new friends. Real asset fund managers who get involved in planning a development and achieving local planning authority approval might emphasise the benefits of such a design to local councils and communities.

The Countess of Wessex House (Hounslow, London) - This is a retrofit of a charity home for children, now repurposed as mostly one-bedroom flats for vulnerable or disabled ex-service men and women. It is specifically designed to provide trauma and psychological support.

What can detached homebuilders take away from this? The actual design of the retrofit is relatively plain. But in total, it makes a visual impression for its serene use of common materials, aided by a modernistic-design of balconies that would enhance any living space for any reason.

VIVO and So Stepney; Ocean Estate (East Thames, London) - Balconies, gardens and terraces define this 707-home two-building apartment block development. Built at a cost of £220 million, it regenerates a neighbourhood that was formerly one of the most deprived estates in England.

What can detached homebuilders take away from this? Outdoor access and vegetation is a value even - and especially? - in the most urban environments. The canary yellow balconies are a visual pop in the cityscape, an example of how the creative use of colour can distinguish structures in pleasing ways.

Royal Road (Elephant & Castle, London) - The 96 apartments in this 100 per cent affordable development are in four buildings situated around a well-designed courtyard. Sixty-per cent of the homes are triple-aspect (three sides have windows) and 40 per cent have dual aspect, providing sunshine and natural airflow as desired. Cost to build was £12 Million.

What can detached homebuilders take away from this? Daylighting and views are valuable to residents, as is a common space such as a courtyard.

Castlemaine Court (Byfleet, Surrey) - Built for just £2.1 million, these 16 homes offered at social rent are wheelchair accessible and have walk-in showers. Most are dual aspect with large windows that permit good quality natural lighting. Timber interconnecting walkways and a single exterior staircase unify three buildings in the development.

What can detached homebuilders take away from this? This development took top honours in part because to build it required much collaboration with the surrounding community and ward councillor who initially offered much resistance. Investors who put real assets into buying land must undergo a similar challenge when seeking use change approvals from local planning authorities.

Investments in any type of housing schemes require a due diligence process. An independent financial advisor is best equipped to assist investors in determining which properties or instruments fit the specific needs of individual portfolios.

How can Housing Developers Build Healthier Communities?

Research shows that certain features such as green space can add significant value to a property. But there are other features that can add even more.

The goals of strategic land investment are to buy UK land, achieve local authorities’ approval for a use change and then to build something, typically residences or commercial structures. In the UK, the housing shortage makes that an important function relative to the common good as well - the greater the housing stock, the lower the prices to buy or rent.

But homes and even businesses are not simply brick-and-mortar structures. These are places where people live and work and transact business. They are places that human beings (and perhaps household pets) spend many, many hours of their lives. Their environments affect their sense of wellbeing and their physical and mental health. As this is often visually obvious and intuitive, the value of a built property can go up if the surroundings are attractive and conducive to healthy activities.

Increasingly, the strategy taken by builders is to incorporate healthy features into developments or to advocate for them in public spaces. According to London estate agents Marsh & Parsons, an attractive garden, a roof terrace or close proximity to green, open spaces such as a park can add a 20% premium to property. The firm reported that those homes lacking this green access are harder to sell during the summer months, presumably because the deficiency is more apparent then.

But developers and investors - such as property fund managers who sometimes start from scratch, taking empty land and constructing new communities in those places - could look beyond simply green spaces and outdoor access. Urbanist designer Claire Mookerjee provided a checklist in The Guardian in 2015, providing five urban design mistakes that are detrimental to healthy-living communities. They are:

• Too many fences and barriers - A concern for safety and security has led to walling off areas that has the additional effect of limiting walking. Mookerjee simply implores designers to prioritise “bustling shared spaces that are safe and encourage people to walk.”

• Inattention to what residents want - People who live in communities often have a better idea of what shared amenities are a priority and therefore would be used. A traditional method for gathering those ideas is a “charrette,” a community brainstorm of thoughts and preferences, however that phase of design is often overlooked. Web-based alternatives allow for people to describe if and where they want running or cycling paths, for example.

• Failure to provide extra services that foster healthier living - Basic buildings, pavements and streets do not a community make. Mookerjee encourages development managers to consider incorporating car-sharing schemes, bike storage space, co-operative food growing projects along with developed properties, particularly in multi-unit developments.

• Inauthentic green spaces - In many cities building developers will add green space as an afterthought, resulting in small, isolated patches “better suited to dogs doing their business than going for a walk or exercising,” says Mookerjee. Instead, networks of green spaces that holistically approach communities, providing true walking and cycling venues, are preferable.

• Unfriendly design - Mookerjee concludes that healthy lifestyles are not entirely defined by physical exercise. Rather, she notes that friendly, human-to-human interaction is vitally important and can be encouraged by design. Specifically, she prescribes front doors to open onto streets, balconies with a social distance of up to 10 metres, front porches and steps, and safe common play areas for children - all to make for sociable neighbourhoods.

One question that developers and their investors may ask is, “how much land must be dedicated to these community amenities, and would that not be cost-prohibitive?” An answer to that question might be found in a study conducted in Perth, Australia (Francis J, Wood LJ, Knuiman M, et al. Quality or quantity? Exploring the relationship between public open space attributes and mental health in Perth, Western Australia, Social Science & Medicine, 1982), which found that “public open space quality within a neighborhood appears to be more important than quantity.” In other words, a nice small park might be all that is necessary in some circumstances.

Investors in any type of community will always look to maximise the return on their investments, and that can happen in a variety of ways at different times. But such investments must be considered carefully and are best done with the objective perspective of an independent financial advisor.