Single-family housing is one of the fastest-growing asset classes in the UK and forms a key part of the continued evolution of the living sectors.
Recent data shows that single-family rental makes up nearly 15% of all homes in Europe, with the UK having the lowest level of rental homes, at just 7% of housing stock.
The proven demand for BTR multifamily means there is a clear opportunity for quality institutional investment in the still-untapped single-family sector. The major players who foresaw this opportunity, albeit with different strategies, were PRS Reit, L&G, Packaged Living, Roundhill, Goldman Sachs and Present Made with their sites in the Oxford-Cambridge Arc.
JCA has been at the forefront of design for single-family housing, and throughout Covid, we have had to continually evaluate how rental housing on a large scale can be delivered viably in a low-yield sector dominated by housebuilders.
Covid has significantly enhanced our focus on sustainable living
Taking into consideration cost, delivery and a focus on achieving net zero carbon, we invested significant R&D into the opportunity and constraints of modern methods of construction (MMC), working with leading manufacturers to deliver homes for the sector.
MMC has traditionally been associated with registered providers or housing associations, but over the past few years there has been a distinct change as we have started to design bespoke product for rent that is net zero carbon – not just in build, but in operation too. This is especially critical in a sector underpinned by stabilised, long-term returns for institutional capital.
Across the UK, we are all working hard on our ESG credentials. There is a good reason for that. Those who do not invest now in the creation of net zero assets will effectively have ‘brown assets’ that are discounted or difficult to sell.
This is certainly supported by real estate stock exchange IPSX and Carbon Intelligence, which have together “sought to predict the full impact of net zero initiatives on valuations of UK property and the mitigating actions investors should be taking”.
As architects, we are also keen to consider the short-term benefits to customers of minimal energy costs and sustainable credentials in their homes. In its report ‘Building the Case for Net Zero’, UKGBC, Property Week’s collaborating partner in The Climate Crisis Challenge, found that the cost uplift for building net zero residential buildings was 3.5%, a figure that manufacturers are pushing further down.
MMC is in its infancy in the UK compared with traditional methods. What is sustaining its growth is its ability, through precision engineering, robust testing and minimal waste output, to solve the net zero challenges in both cost and use. Capacity remains our toughest challenge, especially given the speed at which single-family housing and the ESG agenda are growing.
This environmental expectation is also relevant to renters, our customers. We all care about the future and our immediate environment and Covid has significantly enhanced our focus on sustainable living.
ESG demonstrates real benefits to renters, who will choose more carefully where they live in light of it. Brands in the single-family sector that promote wellness, environmentalism and community, and that give back will no doubt flourish. We see the opportunity to create sustainable, beautiful and well-designed housing that is set within landscape-led streets.
By focusing on living sustainably in all aspects of life from the home and active travel to ‘grow your own’ and zero waste, we are working to cultivate homes and communities underpinned by social and environmental stability.
This is what will underpin the most successful single-family assets that perform both now and in the long term.
Jo Cowen is chief executive of Jo Cowen Architects
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