The traditional housebuilding partnership model has not delivered, Vistry boss says

Stephen Teagle, chief executive of partnerships and regeneration at Vistry, has said the current model of delivering homes through a partnership between private sector housebuilders and the government “clearly hasn’t delivered the number of homes that we need”.

Speaking on the Housing Today Live panel, ‘A fair deal on housing’, Teagle said that the industry now has an opportunity to work with the government on a different route to deliver new homes.

He said Vistry has adopted a different business model, which consists of the firm pre-selling a minimum of 50% of homes when its buy a site.

Vistry works with partners, including institutional investors, PRS providers, housing associations and local authorities, to co-invest in the delivery of the site and placemaking, delivering a range of housing types.

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Teagle said: “If we’re really going to raise our game as an industry, and address the chronic shortage of housing, which is a housing disaster, we need to change something, we can’t keep doing what we’re doing.”

He said that the structure of the industry needs to change, which means changing the relationship between housebuilding and government.

On the supply side, Teagle said “we’ve already seen government convert rhetoric to reality”, with evidence that they’re making the planning system “more fluid and less dysfunctional”.

On the demand side, he added “It’s really clear we need a financially robust purchasing sector.”

Giving the example of a former power station site in the Midlands, which will deliver 323 homes in a year, he said: “It’s only possible because there’s a housing association, institutional investor and local authority who all want the same thing and are capable of investing.”

Graham Kauders, development director at affordable housing developer Edaroth, a subsidiary of AtkinsRéalis, suggested that the government should treat affordable housing as infrastructure, in the same way energy and transport are.

He said that classifying affordable housing as infrastructure would provide a much greater level of clarity for investors.

Teagle added that the case needs to be made to politicians, that “if you invest in power stations or transport, you do not see output within the lifetime of a parliament.”

“You can make an investment in housing and be handing over keys within five years,” he stressed.

Simon Gawthorpe, managing director at Urban Splash, said that the government needs to “dial into” the blockers facing the five different parts of the sector: volume housebuilders, local authorities, housing associations, PRS companies and SMEs.

He said: “We aren’t going to get anywhere near to deliver 1.5 million homes unless these five are unblocked.”

Anna Sinnott, head of consultancy at Be First, Barking and Dagenham’s regeneration company, highlighted the challenging situation local authorities are in.

“It’s a catch 22. We know all the things that housing delivers, but because of the financial situation it’s difficult to commit to taking on borrowing and building new homes.”

She added that Be First is reducing direct delivery, borrowing less from the council, and shifting towards partnerships.

On planning, Sinnott, who is a planner by background, said that reform is needed but government needs to take a “tempered and targeted approach, rather than throwing the system into the air and starting again”.

Gavin Smart, chief executive of the Chartered Institute of Housing, welcomed the speed at which the government is acting, noting its understanding of the housing sector’s need for rent certainty. He added that a higher amount of aggregate grant funding is needed to build more affordable housing. 

Smart also emphasised the need for the government to “bring local authorities back into the [housebuilding] game” by stabilising Housing Revenue Account finances. This includes reviewing the 2012 self-financing deal. By transferring an estimated £17bn from local authorities to central government, he said, council housing finances could become sustainable again for the long-term.