Brian Lavery: ‘Build to rent’ initiatives can help address NI’s social housing problem

The current waiting list for social housing in Northern Ireland has received considerable media coverage in recent times, serving to highlight an issue which has grown increasingly urgent.

Housing Executive waiting list figures currently sit at 47,000 people, and the number of homeless people appears to be growing daily, certainly in Belfast.

A simple walk through the city centre will, sadly, show you the reality.

Several commentators have referred to the housing problems of Dublin, and have emphasised the need to act now to avoid the massive under supply that is happening in the Republic of Ireland.

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Rather than look at a broken model, it is, in my opinion, more useful to analyse a working one. And, when it comes to a housing success story, it is difficult to ignore Manchester.

Over the last two decades Manchester City Council has seen a huge growth in the city’s job market and population, which has in turn placed a major demand on the housing stock.

This increased demand has diversified the type of tenure within Manchester.

The city currently has 68,000 social rented homes, the lowest number in the last 40 years, and owner occupation has also declined to levels seen in the early 1980s.

The private rented sector is now the dominant tenure in Manchester at 39 per cent of the city’s housing stock.

It has been private and corporate developers that have stepped into the supply void to provide ‘build to rent’ housing solutions.

Manchester Corporation realised that successful development raises much-needed revenue, in its case council tax receipts and water charges, which in Northern Ireland would be delivered through property rates growth.

To ensure growth and facilitate development, several initiatives have been established.

Successful Manchester-based projects that have provided huge amounts of employment space and housing include Petersfield, Spinningfields, and The Northern Quarter.

Previously neglected areas, often featuring abandoned and disused buildings, are now flourishing again, with further projects including The Noma Regeneration, to an area north of the city centre, Castlefield, and Piccadilly, which is expected to provide 13,000 new homes together with 820,000 sq m of commercial space and 40,000 new jobs.

The only major build-to-rent housing project coming out of the ground in Belfast is the Loft Lines scheme in Titanic Quarter.

We must, therefore, ask ourselves why no substantial redevelopment, including housing, has taken place at the Sirocco site, Belfast Waterfront and Tribeca site in the city centre, where abandoned and disused buildings are all too evident.

Another important element of the conversation is the growing demand in Belfast for purpose-build student accommodation, with the current shortfall believed to be sitting at almost 5,000 beds.

The students that live in clusters in these schemes will often be looking for similar housing arrangements when they graduate, and that will bolster the ‘build to rent’ section of the market – something to be considered with a number of PBSA schemes in planning.

Manchester has achieved success in integrating different development agencies along with main utilities and including the private sector to deliver environmentally sound plans designed to bring life and living space back to the city centre.

‘Investment Zones’ have also been created, with funding packages available to kick-start housing development.

Levelling up funds received in Manchester have been committed to development, with £420m being utilised to create 5,150 units at 40 sites across the Greater Manchester area.

Developers can apply for a loan to kick-start housing projects that would otherwise be difficult to fund on any loan size between £500,000 and £30m, with security requirements only dependant on project specifics and a maximum of a four-year loan term.

Stretch, senior debt and mezzanine finance options are also available from the council.

The Northern Ireland Investment Fund, managed by CBRE Capital Advisors, is currently open for loans to the student and build to rent sector. While that is to be welcomed, further local and national investment funds are necessary to support housing developers in the city centre and throughout the region.

Many UK regional funds are aligned to allow local councils to retain all rateable value and corporation tax revenues over a 25-year period, meaning that they get payback first before returning funds to the central government pot.

Such initiatives should be taken up in this region. If we do not act immediately to stimulate housing development, together with an upgrade of our planning system and utilities provision, we may still be walking through derelict, depressed and underdeveloped areas for the foreseeable future.

Brian Lavery is managing director at CBRE NI