Rory Wilkinson, digital editor of Show House, recently spoke to Mary Parsons, regeneration and partnerships director at Lovell Partnerships, to find out more about the Partnerships branch of the company, the current state of play in the market and what’s next for the Group.
What changes are you currently seeing in the market?
There are so many different changes at play right now, both demand and supply side, that it’s difficult to call whether they are a blip, albeit a very long one, due to different economic or political cycles or something more structural/tectonic happening in the market. Each time we think we have an answer, another challenge presents itself and it doesn’t feel like the usual market ups and downs.
As an example, Lovell has always catered for more first-time buyers – perhaps largely due to our focus on regeneration areas. Over the last two years or so, that has shifted and we have far more second-time purchasers proceeding. Clearly, first-timers are buying somewhere, but this is more commonly in the second-hand market, and often not apartments. For any housebuilder, if you lose your main customer group that is not in a chain, we’re never as a sector going to get the sales and absorption rates back up to where they should be and where the government wants them to be.
I mentioned apartments, but this has been particularly evident in London, where it has been the predominant typology for decades to maximise density and housing numbers. Is it post-Grenfell nervousness in the buyer and lender market or a consumer behavioural shift? Maybe that first step into homeownership is less likely to be an apartment now, but rent for now and buy later? Whatever the tenure, it must be affordable to live there, with service charges and running costs as low as possible.
Looking at the supply side, we work with many different local and combined authorities. We’re closely watching how local government reform and the switch to new unitary authorities will unfold and what opportunities, and perhaps challenges, they may present along the way.
How has Lovell and the wider industry responded to these changes?
Lovell has always been a partnerships business, so we are both contractor and housebuilder, and mixed tenure and regeneration is what we do. Therefore, when the sales market is constrained, our ability to switch tenures or lean into contracting is essential to our continued resilience and year-on-year growth. That’s our long-term business model, not a short-term fix. Build-to-Rent is playing an increasing role in our multi-tenure offer on our larger sites alongside our affordable partnerships.
It is fair to say that the package of support from the government through Homes England is impressive and, once rolled out, the Social and Affordable Housing Programme should have a real impact on housing delivery over the coming years. For me, the new National Housing Bank could be game-changing, and I’m certainly following that with interest! However, so much has been focused on supply side interventions, and right here and now, the largest constraint is demand side. Whilst affordability had been improving as incomes were rising, the pressure of interest rates, inflation and market sentiment at present isn’t helping.
Are the challenges nationwide, or are you seeing a different situation on a regional level?
It’s fair to say that some changes have impacted all regions, but there are nuances between them. I’ve mentioned London and its well-documented challenges already, however, there are positives too. Two of our most consistently fastest-selling sites have been in Newport, South Wales. You could say that was due to Wales still having Help to Buy, but that is by no means the whole story. We have seen a lot of customers priced out of a family home in and around Bristol, and are seeing value for money and a manageable daily commute in South Wales. Because we are a regional business with a national perspective, we always try to cater to those local market dynamics.
What does the future look like for Lovell Partnerships?
We have some great partnerships, joint ventures and large-scale regeneration schemes that form the backbone of our forward pipeline. We hope to add to these, as well as helping our current partners deliver their programmes through the land and opportunities we can bring to them.
We have also diversified our capability to support our growth and offer to our partners, and to build our future capacity. We have invested in establishing our Strategic Land business to help underpin medium-term growth and pipeline of sites. We have developed our own ‘Later Living’ mixed-tenure products and offering, because we can all see that will continue to be a growing demographic that isn’t tremendously well catered for at all levels of the market. We are also expanding our refurbishment and retrofit offer, Lovell Renew, to be able to support our partners’ asset management plans.
Our aim is to be a ‘partner of choice’, which perhaps sounds obvious for a partnerships business, but it’s one that we’re fully committed to!
