FoBRA Housing Report for 18th Jan 18 Committee
On taking over the Housing Brief I wrote an update on housing matters generally for the FoBRA website. Here is the link http://www.bathresidents.org.uk/priorities.php?Housing-1 . I urge you at least to look at it, even if you do not read it - it is only half a page!
There are, in my view, three issues of which Residents' Associations should be aware that may potentially affect housing in 2018 and beyond:
1. Institutionalisation of the Private Rented Sector (PRS)
£500 billion is earmarked by large financial institutions and corporate investors for PRS development in the next 10 years. At the moment, more than 95% of rented homes in the UK are owned by mom and pop landlords who, on average, own 1, 2 or 3 properties. Institutional investment (owning or developing hundreds or thousands of properties) will bring about a 'sea change' in availability and quality. Expect to see higher quality accommodation, more thoughtfully executed "soup to nuts" delivery of space, with technology and innovation to be deeply integrated into the fabric of these modern living spaces.
2. Focus on Retention vs. Transaction
• As more and more customer-centricity is introduced into real estate, more companies are recognising that, while a single lease may currently be for 12-18 months, that person, couple or family will likely be renting a home for many years. A significant number of people rent for at least the first 10-15 years. Over time, but sooner rather than later, this will bring about a change in Landlord & Tenant leasing legislation.
• Developers, managing agents and software companies are all recognising that helping the "journey" of a tenant is not simply transactional - it's process. However, that process will mean a gradual rise in rental values (in order to drive up the capital values to institutional financial-return norms).
3. Student Housing v Affordable Housing
• This section is particularly pertinent to Bath. We currently have around 89,000 residents, of which some 25,000 are students who do not pay Council Tax. Whilst there is considerable lobbying of UK Government by B&NES and other local authorities, this situation is unlikely to change (for political reasons, with student fees still high on many people's criticism agenda) in the near or medium term. What may change, however, is that Landlords may be compelled to pay the Council Tax on properties that they own and which are rented to students: not popular with landlords or students but more than just a theoretical idea.
• I would also like to say that, with the possible exception of Bath Spa University, who have commissioned some off-campus housing for some of their students, most planning applications for off-campus student housing are by speculative developers who hope to rent to universities either on a student by student basis or by some form of bulk letting, managed by the university rather than the developer/owner.
• Why then do they build student housing, rather than affordable housing? 3 quick reasons : smaller space requirements = more housing units; much less car parking provision required under various legislation/regulation = more housing units; more housing units = more profit.
There is potentially good news on the horizon. It is obvious to many that Bath's public realm is in a poor state. Roads, pavements, footpaths, parks and gardens, etc, are all, in the main, lacking attention due to a severe lack of availability of B&NES' council funding. In my role as Chair of the City of Bath UNESCO World Heritage Advisory Board, for the past six months, I have been pushing the Leadership of the Council to reconsider some form of Tourist Tax. In this week's Council Budget announcements, such consideration is on the agenda, with meetings being set up by Cllr Tim Warren (TW) with both national Government and the Local Government Association. The latest figures show that in 2015, some 5.7 million visitors a year came to Bath. Around 1 million stayed overnight. It is not known exactly how many nights, in total, but a voluntary bedroom tax of £1 a night might raise between £700k and £1m a year. Even half that amount would enable considerable improvement works.
Think about how many new hotels (and therefore bedspaces) have opened or are planned in Bath since 2015. I am pleased to say that TW has given me a verbal commitment that a significant proportion (in his words 'if not all') of the money raised would stay in Bath for public realm and other World Heritage improvements.
NB. Any tax or levy would have to be voluntary (ie deductible if not approved from the visitor's hotel bill), until formal legislation becomes law. This voluntary system is working well in the Lake District and the Norfolk Broads, and Tim Warren has asked the World Heritage Site team to find out more about how the voluntary levy works in these two locations. TW is also encouraged by the work being done in Birmingham for a similar, but compulsory levy, to raise money for the upcoming Commonwealth Games.
Barry Gilbertson, FoBRA Housing Lead