National Head of Residential, Paul Sambrook, looks back on 2021 and anticipates whats to come over 2022.
I am always struck when I reflect on a year passed that you tend to forget what happens at the start. This time last year we were welcoming the launch of the Covid-19 vaccination programme, Joe Biden was about to be inaugurated as the 46th president of the United States and Brexit finally came into play. We’ve come a long way in 12 months and the question we all want to know the answer to is – what’s next?
It feels the same on a professional level. 2021 has, as ever, been a dynamic year for the residential sector. But what were the stand-out points? I’ve picked just a few that I thought were of note and provided my view as to what I think could, or hope, will happen in 2022.
Stamp Duty Holiday – the honeymoon’s not over
At the start of 2021, I think it is fair to say we were bracing ourselves for the end of the Stamp Duty holiday with many expecting house prices to drop off a cliff and the market to rapidly cool. But although we did see some slow down, the market remained remarkably resilient, with UK house prices rising by more than 10% during the year (Nationwide). In fact, UK Finance, the bank trade body, said overall 2021 was a record year for mortgage lending. Something I wouldn’t have put my money on 12 months ago. The shortage of housing stock and post-pandemic demand for new spaces to live and work in has shored up prices – with some regions such as the West Midlands continuing to see big rises at the year end.
But the big question is – will this continue? I suspect 2022 could be more of a bumpy ride, particularly the first six months. Uncertainty around increased materials costs and a squeeze on the supply chain could cause some nervousness. This coupled with interest rates being increased in December to tackle inflation and if the government do taper down affordability schemes such as “Help to Buy,’ could well dampen the market as people decide to stay put.
The rise and rise of BTR
I think we will see the continuing growth of the BTR market in the UK which has also seen momentum in 2021. The proportion of this that is truly affordable remains quite small, so there is a lot of room for growth, particularly in single-unit quality family homes and later living accommodation in well-connected areas that are in high demand. There is still so much that we can draw on in the UK from Europe, the US and Canada which has a much more sophisticated and mature BTR market.
Focus on quality, safety and leveling up
2021 also saw the long-awaited Building Safety Bill introduced in the House of Commons in July. As an industry we have learned a lot, and there’s still a lot more we can do to ensure we focus on quality and get it right as well as address legacy concerns. With Rishi Sunak announcing that larger housebuilders will be required to pay a 4% ‘residential property developer tax’ for building safety remediation works over 10 years, this is an area that we will continue to hear about and act on during 2022. And rightly so.
On the subject of government, we also had the formation of the “Department for Levelling up, Housing and Communities” with Michael Gove at the helm. I am really interested to see what direction this takes in the next few months. This is clearly a massive agenda and I hope it illustrates a continued commitment to building quality housing and a focus on regeneration and place making. We need an innovative approach to how we regenerate areas such as our town centres combining retail and commercial with residential to provide good, affordable healthy places to live.
Sustainability – top of the agenda
The COP26 Summit has to be one of the standout moments for me in 2021. We may have been frustrated by the compromise at the end of the conference, but it has put climate change firmly at the top of the agenda with an urgency that we need to act now.
Within the residential sector, we have seen work being ramped up to ensure we are producing net carbon zero homes. It has also raised the profile of some of the critical issues that we need to tackle, such as decarbonising our existing housing stock. With the Heat and Buildings strategy announced in November 21 now setting out how the UK will decarbonise homes as part of setting a path to net zero by 2050, upskilling those who work in the built environment industry to provide sustainable solutions and having the conversation as part of every project, must be a major focus this year.
Increasing adoption of digital
The last 12 months have also seen the continuing adoption of MMC – though some may say we could be moving faster. Through increased offsite manufacturing and working smarter we can drive efficiencies, cut programme time and reduce cost and risk. With the uncertainty we will be facing in the next six months through increased materials costs and labour shortages, MMC will be hugely useful in countering this as well as providing major sustainability benefits. We all know that investors are increasingly considering Environmental, Social and Governance metrics in their decision making so hopefully this will stimulate further adoption of digitalisation and the drive for more sustainable practices.
Here’s hoping that when we reach the end of 2022 we will be reflecting on another resilient year for the residential sector and we are continuing to innovate as we deliver the quality, sustainable housing stock we urgently need.