It is strange to conceive that the Roaring Twenties, a time known for optimism and dramatic social and political change, began 100 years ago. This decade saw new technologies, especially automobiles, moving pictures and radio bringing ‘modernity’ to large parts of the population.
In the home, modernism was taking off, with the setting up of the Bauhaus, and shocking the world with its pared-down austere look. Architects began designing objects for the home, such as coffee sets and radios, as well as buildings. In the middle of the decade, Art Deco was showcased in Paris and became the significant new style. Jazz and dancing were rising in popularity, in stark contrast and in opposition to the mood of the recently ended World War I, it became known as the Jazz Age.
So, I wonder what the next set of ‘20s will bring for the generations beyond to look back on, and consider its impact on society?
While I am certainly not qualified to contemplate the potential global political and macroeconomic changes, I am more than happy to share my thoughts on what could be in store for the property market and consider how the decade might play out.
As with the ‘20s, I do believe a significant shift and change will take place in how and where we live, but also in what role we, as property professionals, will deliver in people’s lives. At Redbrik, we’re always looking to serve our clients’ needs and add value. So, as we enter the next decade we are considering, what the role of an estate agent is in 2020, and how we can be more relevant and enrich our offer to you.
Firstly, I have never been fond of the term ‘estate agent’, it conjures up images of the sleazy, disingenuous, shiny suit salesman from the 1980s. That is not Redbrik. I talk instead about how we are a client’s Property Agent. I know it is only a subtle change, but one I hope helps differentiate what we do and are about. We want to have a long-lasting and personal relationship with our clients relating to all things property.
We don’t want to just transact with customers once every decade, but to actually help, advise and plan throughout your lifetime relationship with property. Whether that is renting, buying, selling or letting, we know how good decisions in property can have a positive impact on people’s lives. We want to help more people make more sound decisions about their property options.
In the same way that you have a financial advisor for mortgages or pensions, who knows you personally and to whom you return for advice and support, we want to be your agent for all things related to your property. That’s why in 2020, we will be adding to our offer, launching new and exciting services to help us fulfil that ambition.
For me, it’s clear that estate agents have needed to evolve for some time. A lot of the big corporate agencies have been failing badly for several years. The results and losses in these businesses are frightening for all concerned not least the staff and their remaining customers. It seems these companies that were set-up to help the customer have morphed into organisations whose only role is to serve the shareholders, not the end-user.
Similarly, the much-hyped online revolution of self-service ‘estate agency’, with its one-size-fits-all listing approach, is not delivering for customers either. Selling or managing a home is a personal and very individual process. To provide a quality service that realises the best results for clients can, in my opinion, never be achieved through cheap, fixed upfront payments for just listing a property.
The results of online listing firms have spoken for themselves, with the likes of Emoov and Tepilo going bust. Customers have been left thousands out of pocket, with nothing to show for their significant upfront payments. Hatched was another online-only agency that was closed down this year when its owners, Connells, could not see any future for the model.
Yopa and Purplebricks continue to seek further investment to fund huge losses and try to sustain their multi-million-pound marketing.
Our plan at Redbrik is to continually refine what our clients need from us, and it always relates back to our ‘fly-wheel’ approach to improvement.
In terms of the property market itself, one thing is crystal clear – we need more new homes.
In a recent report by the National Housing Federation, they considered that 340,000 new homes are needed per year to meet the demand. They suggest that 8.4m people, equivalent to one in seven across England, live in ‘unsuitable housing’. Overcrowding, the inability to afford the rent or mortgage, and hidden households (where people live with friends or relatives as they are unable to afford to move out), are issues which each affect more than 2.5 million people alone.
Current rates of house building are half this level. Just 169,450 new homes have been completed in the last year.
So where are these new homes going to come from and how will they be delivered to the market? Personally, I think the next decade provides us with a fantastic opportunity for our towns and city centres to re-define themselves as genuinely fabulous residential offers. There are so many incredible vacant and underused buildings that can be converted into dwellings.
Creating the right mix of housing, retail, food and beverage and commercial can revitalise our high streets and bring people back to living in the centres. With less reliance on the automobiles that came to the masses in the last ‘20s, there is more opportunity than ever to move back to our town and city centres.
We are already seeing the start of this movement in Sheffield with the re-imagination of Heart of the City II (HOC II), formerly conceived as the retail quarter, which has adapted to changing consumer demand.
Backed by Sheffield City Council alongside its strategic delivery partner Queensberry, the scheme will provide a dynamic and vibrant mixed-use district in the heart of the city centre, making Sheffield an even more exciting and interesting place to live and work. (Check out our interview with Paul Sargent, on page 24 for more info).
In Chesterfield, the Waterside scheme to the immediate north of the town centre is a £320m mixed-use regeneration programme that will provide a thriving and successful new part of the town centre. This will create a new community with 1,500 modern houses and apartments, as well as new employment opportunities, shops, cafes and bars around the new canal basin and a public square.
Another thing you can expect to see in the 2020s is the further rise of private rental sector (PRS). Knight Frank’s latest tenant survey report expects investment in the UK’s PRS will soar to £75 billion by 2025, with an additional 560,000 households expected to be in private rented accommodation by 2023.
The report showed an interesting demographic shift for the PRS too. Young professionals, aged 25-34, are no longer the most prevalent group – instead, it’s those aged 35-49 that are now dominating this space.
Within this middle-aged bracket, those at the higher end of the age range are less likely to receive the best mortgage rates too. Therefore they are more likely to remain in rented accommodation for years to come, fuelling the sector’s continued growth.
So despite the legislation and taxation changes for landlords, the property market remains an excellent investment, especially against low-level interest rates. Many of the legislative changes designed to help the tenants and reduce their costs, have actually had the opposite effect and resulted in rents rising, giving better yields to landlords.
Another reason for the rise in older tenants is downsizers releasing cash from their homes. Data from Let Alliance showed 12 per cent of all tenants who moved into new privately rented homes since the beginning of 2018, were previously living in the owner-occupied sector looking to release equity. Unsurprisingly, this percentage is higher for the older tenants, with 36 per cent of 50–60-year-olds and 42 per cent of over 60s previously living in owner-occupation before choosing to free-up capital and have flexibility in where and how they live.
With fewer traditional bungalows, downsizers will look at new styles of lateral living too.
At Redbrik, we are already working with some innovative developers pioneering in this sector. Creating a fresh breed of larger luxury apartments, as seen at the likes of Whitely Quarters and Ridgemount (S10, Sheffield) and soft-contemporary bungalows such as Jacques Orchid (South Normanton) and St. Mary’s Walk (Chesterfield).
One thing history has shown us is that house prices will continue to grow despite political uncertainty. I have given up speculating on the political system, or what will be the eventual outcome of Brexit. However, it’s clear from the sheer number of people we are talking to who are looking to move, we are all intent with getting on with our lives.
The next decade promises much excitement, change and opportunity, and I don’t think there has ever been a more exciting time to be involved in property.