Masterplan Key to Building Stronger Cities in Nigeria – RICS

The Royal Institution of Chartered Surveyors (RICS), Nigeria group has called for the development of stronger cities that easily absorb urban shocks and take into cognizance lives of residences irrespective of their physical challenges.This was the submission of experts who gathered during the group’s Continuous Professional Development series (CPD), entitled, “Building stronger cities, a review of the revised Lagos masterplan” which held in Lagos.

Permanent Secretary, Lagos State Ministry of Physical Planning and Urban Development, Mrs. Dapo Thomas at the forum, explained that building stronger cities is actually more than having a master plan but having master plans/designs that take into cognizance the lives of people. She stated that as an operative development plan, masterplan is a living document, hence, the need to keep revising and reviewing it.

“Building stronger cities would also mean building communities. Lagos Government recently created the Lagos State Resilience Office. That means, we are building against shocks and stresses that could militate against the growth of cities,”she said. According to her, Lagos is one of the 100 resilience cities of the Rockefeller foundation. This, she said, places more pressing demand to keep building and changing things in line with the dynamism of human existence.

“We need to look at all facets of life, it is not only about the master plan, the master plan is actually a cross cutting issue with all of our ministries because they must have an input. Right now, the Ministry of Works has inaugurated what is called, the Masterplan Champions and this is because we recognize that there would continue to be changes in governance and in life”.

“We must be thinking about other people, particularly the disable, how can they live a well and meaningful life and achieve their goals despite their disabilities. We have to incorporate them in all our master plans. We also need to think about how to put hospitals in place, where they are easily accessible.

These are the things that we keep reviewing in our master plans”, she explained. Contributing, a town planner, Ayodele Adediran said if the cities must be built, it must build on something. He said master plans are not popular in the sense that they look restrictive, suggesting that they must be making flexible.

“As far back as 1928, master plans became popular because of the plague that broke out, claiming lives just like the building collapse. Since then, we have been the one planning while others take care of sanitation or environment and schemes of development. We used to have stronger institution framework”.

In the last 20 years, Lagos has been faithful in ensuring that regimes of preparing master plan is operational. We have to give credit to the state. Every part of Lagos is almost covered with some documents that could form basis of master plan”, he said.

Adeniran who is also NITP National Legal Adviser, said masterplans must be in relevance with the new urban agenda, inter-modal challenges of the cities and the Sustainable Development Goals (SDGs), as plans will not stand in isolation but inter-connected with other goals.Expounding on the issue, a former Commissioner for Physical Planning and Urban Development in Lagos State, Toyin Ayinde said like most designs, master plans must start from the general to the specific and give the whole view of development.

“If developments on a master plan tilt to a particular side, you will see a shaking and the design would fall. This is what happens when you develop Lagos Island more than Alagbado.

You think of a masterplan as a plan, but it is not a physical thing but also deals with economic issues, social and sociological issues in the city system. We must bring our plans to the level of neighborhood that people could easily identify their house from the land use plan,” he said.

Ayinde who doubles as NITP first Vice President, added, “master plan can be changed because a city is a living organism subject to an origin, growth, a decline and death and that is why we must take the right decision. There is nothing that can’t be changed. That is why some uses would change over time.

A good master plan must take into consideration law and order because if you don’t have law and order, you can’t really implement your master. Probably this is why you have some break down of law and order in some places. The masterplan itself is a law passed and gazette.”

Earlier, the Chairman, RICS Nigeria Group, Mr. Gbenga Ismail explained that the CPD focused on reviewing the planning challenges and effectiveness of the master plan in Lagos State.“The theme “Building Stronger Cities” therefore represents learning points that draw on failures, challenges and solutions. Lagos is currently challenged, and if we can solve the issues prevalent then this can be taken to other states. It is important that our cities begin to work for us,” he said

Victor Gbonegun

UN Picks Kenya to Host Smart Housing Prototype

UN Environment, UN Habitat, the Yale Center for Ecosystems in Architecture and associated partners are working on designs for smart houses, one of which is on display at the UN Environment headquarters in Nairobi, Kenya.

Africa is urbanizing fast, as its population grows and many flocks to cities in search of jobs, education and healthcare. Studies show that hundreds of millions more Africans will live in cities over the next three decades.

Many of these new urban Africans, however, are likely to end up in informal settlements. Already an estimated 200 million Africans live in informal settlements—often without access to energy and sanitation.

The growing class of urban poor need access to decent housing. But the challenge is that the global housing sector already emits almost a third of global greenhouse gas emissions and uses up to 40 per cent of the planet’s total resources. New approaches are clearly needed.


As the housing sector grows—and it must grow if we want an equitable world—we need to reduce its environmental impact, not raise it,” said UN Environment Acting Executive Director, Joyce Msuya. “Smart design is the only way to meet our housing needs and stay within planetary boundaries.”

First unveiled at the fourth United Nations Environment Assembly, the 3D-printed modular structure, made from biodegradable bamboo, aims to spark ideas and debate on how future biomaterial processes can help meet the Sustainable Development Goals, Habitat III New Urban Agenda and Paris Agreement.

The pavilion shows how post-agricultural waste—like bamboo, coconut, rice, soy and corn—can be turned into construction materials. It demonstrates solar energy and water systems that make homes self-sufficient and zero carbon. It highlights how micro-farming can be achieved with plant walls. All these features, and more, are integrated, monitored and managed by sensors and digital controls.

“As urbanization gallops forward, people around the world are tired of seeing precious natural habitats paved over with toxic, energy-intensive materials such as concrete and steel,” said Anna Dyson, Director of the Center for Ecosystems in Architecture at Yale University. “In the 21stcentury, global construction practices must innovate towards nature-based solutions for future cities. Our research consortium with East African collaborators is devoted to advancing state-of-the-art locally produced building systems.”

It is fitting that the pavilion is based in Kenya, as the government there has prioritized affordable housing as a key pillar of its Big Four Agenda, which aims to make the East African nation an upper middle-income country by 2030. Over the next five years, the government plans to build over 500,000 affordable houses across the country to meet the ever-growing housing demand.

To achieve the low-cost housing agenda, however, the industry needs to embrace technological changes that will result in the use of innovative sustainable construction, the aggregate effect of which would be to lower the embodied energy and average cost of manufacturing and housing.

“Architecture must address the global housing challenge by integrating critically needed scientific and technical advances in energy, water, and material systems while remaining sensitive to the cultural and aesthetic aspirations of different regions,” said Deborah Berke, Dean of the Yale School of Architecture.

The pavilion serves as a starting point for those in government and industry to think about what they can do better. It is part of a series of demonstration buildings, which started with a 22-square-meter “Ecological Living Module”, powered by renewable energy and designed to minimize the use of resources such as water. This module was displayed at the United Nations High-level Political Forum on Sustainable Development in 2018.

Baraka Jefwa

Shenzhen joins top 5 most expensive cities for owning a home

Hong Kong has retained its title as the world’s most expensive urban centre to buy a home, while neighbouring Shenzhen, the tech of capital of China, has joined the ranks of the world’s five most expensive cities for the first time, according to a survey of 35 cities around the world by real estate consultant CBRE.

The average cost of owning a home in Hong Kong rose 5.5 per cent last year to HK$9.4 million (US$1.2 million), which translates to US$2,091 per square foot for a typical abode measuring 574 square feet (53 square metres), or about 40 per cent more than second-placed city Singapore, CBRE said.


Meanwhile, Shenzhen located across the Hong Kong border in southern China and home to some of the country’s biggest technology companies Huawei, ZTE and Tencent, ranked No 5 globally even as house prices contracted 0.1 per cent last year to an average US$680,283, or US$726 per square foot.

“Upon becoming a Special Economic Zone in 1980, the growth of Shenzhen has been unprecedented, with its population increasing to more than 12 million. It is now one of the world’s wealthiest cities,” CBRE said, adding that the city produced 90 per cent of the world’s electronic goods.

The survey findings underscore the challenge for Hong Kong’s chief executive Carrie Lam Cheng Yuet-ngor, as affordable housing is a mainstay of her administration’s policies. She has proposed a vacancy tax to force developers to add more housing to the city’s supply, and enlarge the proportion of subsidised homes to help lower-income households.

“Last year, Hong Kong saw 17,790 private housing completions but this was not sufficient, given the current pressure on demand in relation to the size of the city and the limited land available,” CBRE said.

Hong Kong’s home prices rose 1.6 per cent in the first two months of 2019, after dropping by 9.2 per cent from August to December, according to data from the city’s Rating and Valuation Department. Property prices were bolstered by stock market rallies in Hong Kong and in mainland China, as well as the dovish stance on interest rates by monetary authorities in the US and in the city.

Hong Kong

Homebuyers came back in droves in March with 649 lived-in homes selling for more than HK$10 million each in March, almost double the number of transactions at that price point in February, according to Hong Kong Property, a local agent.

“We’ve seen home seekers eager to enter the market, even though some homeowners have raised prices,” said Richard Lee, CEO of Hong Kong Property. “It is hard to see home prices collapsing in the city, unless the global economy tumbles.”

Various surveys, studies and reports have placed Hong Kong as among the world’s three most expensive cities at least since 2015. CBRE’s study, which began in 2015, canvassed residential property prices from January to August last year, before Hong Kong’s real estate bull market faltered.

Shanghai, China’s largest commercial city, was in third place while Vancouver ranked fourth.

Shenzhen’s economy surpassed Hong Kong’s for the first time in 2018, growing by 7.6 per cent to 2.42 trillion yuan. Economic growth in Hong Kong rose by just 3 per cent to HK$2.85 trillion.

“Shenzhen has one of the highest expected GDP growth rates for 2019 of over 8 per cent and the population is set to continue growing. A shortage of residential land has led to an increase in urban housing estates, but housing completions last year totalled 41,731, lower than the average annual completions over the last decade,” said CBRE.

South China Morning Post

Buhari approves appointment of new Federal Fire Service boss

President Muhammadu Buhari has approved the appointment of Mr Liman Ibrahim as the new Controller-General of the Federal Fire Service.

A statement signed by Al-Hassan Yakmut, Secretary, Civil Defence, Fire, Immigration and Prisons Services Board on Thursday in Abuja said the appointment took effect from March 29.

Fire Service


Yakmut said that Ibrahim’s appointment was made following the retirement of Mr Joseph Anebi, the former fire service boss.

“The appointment is for an initial term of 4 years and subject to the extant rules and regulations governing retirement in the public service,” he said.


LASG, Magodo residents disagree over master plan review

The residents of Magodo Government Reserved Area are currently embroiled in a running battle with the Lagos State Government over the proposed review of the area.

Some of the residents, who spoke with The Punch, accused the state government of reviewing the master plan of the area and presenting it for their approval without their input.

Magodo is an upscale residential development, created by the Lagos State Government in the 1980s and comprising phases 1 and 2.


The residents alleged that the state government planned to convert the entire area into mixed use to accommodate other forms of developments other than residential.

A resident who spoke on condition of anonymity said the process began in 2017 when the state government contracted a firm to review the master plan of the area.

He said analysis of land use and conflicting uses were done and sent to the residents association for review but the entire process suddenly stopped in 2018.

According to him, on March 22, 2019 the association got a letter informing residents that government officials of New Towns Development Authority, Lagos, were ready to make a presentation of the final draft.

The 1st Vice-President of Magodo Residents Association, Mr Bajo Osinubi, told our correspondent that in early March, the association wrote to the government to know what was happening with the review but got a response that there would be a stakeholders’ meeting on the final draft.

“This means everything done before had been put aside. So, the residents association refused by writing to the commissioner; he replied that the meeting was for approval and for rubber stamping,” he said.

Osinubi said residents of Magodo Phase 1 refused to attend the stakeholders’ meeting while those of phase 2 attended but rejected the draft.

He alleged that by refusing to carry residents along, the state government planned to make a mess of the residential estate.

He said, “In my 12 years of living in the estate, I can count the number of things the government has done here; we do our things ourselves. We also fight commercialisation because we don’t want to be like Lekki, which is in a mess, with residents selling their properties and moving down to Magodo.

“In the final draft, they turned all our arterial roads into mixed development; with that, anything can happen. It simply means that next to your house, you can have a church, mosque, a club, a seven storey-building or a supermarket. But from the beginning, Magodo was created as a residential estate.”

Osinubi stated that over the last five years, the state government had been trying to link the estate with some virgin marshy lands, which were supposed to have wetland, adding that the review might be a fast way to achieve that.

When contacted by our correspondent, the General Manager, NTDA, Mr Wasiu Akewusola, said Magodo residents had already turned the area into mixed use with illegal conversion of residential buildings to schools and offices, hence the move by the government to review the developmental plan.

Akewusola said, “Planning is dynamic and Magodo is over 30 years old. We planned it as residential but even at that, there should be provision for other activities, not everywhere will be residential; there will be schools and others.


“The residents themselves are turning the place into uses that suit them and the government cannot stand and watch, so it decided to review the developmental plan and appointed one of the residents as a consultant on the project.”

The GM said the review was just for law and order and to legalise conversion of residential buildings into other uses.

The residents have, however, written to the state government, asking for three months to deliberate on the proposal of a draft new plan for the 21 zones of the estate.

“We want to study the draft, bring in experts to tell us the environmental impact of the new plan before we decide on what to do. We are basically a residential estate and we want to remain so,” Osinubi said.

Maureen Ihua-Maduenyi

Building Collapse: Artisans hail Buhari on Engineering Registration Amendment Act

Artisans under the auspices of Association of Tilers, Nigeria, ATN, at the weekend, hailed President Muhammadu Buhari, over the signing of the Engineering Registration Amendment Act, 2019, which gives constitutional backing to Council for Regulating Engineering in Nigeria, COREN, to effectively regulate the sector.

The National President, ATN, Hassan Olanrewaju, who made the commendation however,  lamented the invasion of quacks in the construction industry which has resulted in incessant collapse of buildings and loss of lives  across the country over the years including the recent incidents.

Olanrewaju also stated that Buhari’s assent to the amended Act was the best decision that would strengthen the enforcement powers of COREN to prosecute any person or firm found to have contravened the provisions of the Act in a court of competent jurisdiction, adding that with this constitutional backing, COREN will instil discipline and sanity in the construction industry.

He said: “We were very grateful to receive the news that  President Muhammadu Buhari has signed the Engineering Registration Amendment Act 2019. This is highly commendable and a step in the right direction by Mr. President. This will boost COREN’s powers to drastically reduce all forms of quack activities in the industry to save lives by prosecuting  those found guilty.

“We in Association of Tilers, Nigeria ATN, have been a noble and professional organisation registered with the Corporate Affairs Commission CAC, under the Company and Allied Matters Act 1990, therefore throw our weight behind COREN to sanitize the industry.”

He also lauded the effort of the President of COREN, Kashim Ali and his team for ensuring the amended Act scaled through and passed into law by Mr President’s assent. “We laud the President of COREN, Kashim Ali and his dogged team to ensure the amended Engineering Registration Act 2019 for the overall safety of Nigerians as far as construction is concerned. We, as part of this prestigious organisation, COREN, support the leadership on this new mandate as far as the amendment of the Act is concerned,” he stated.

The association also commended the ongoing demolition of unfit buildings in Lagos State by the Lagos State Government, and appealed to landlords and tenants to cooperate with the government. It would be recalled that the Senior Special Assistant to the President on National Assembly Matters (Senate), Senator Ita Enang, disclosed the assent of Mr. President to the Engineering Registration Amended Act 2019 last Friday to State House correspondents in Abuja. Enang explained that, “By the assent to the amendment, it ensures that, before being allowed to practice in Nigeria, such foreign engineering practitioners will be granted work permit, register with the council and obtain such licenses as may be required from time to time.

“The Act further admits into the council the following- Nigerian Association of Technologists in Engineering, Nigerian Society of Engineering Technicians and Nigerian Association of Engineering Craftsmen and one person each appointed to represent the Association for Consulting Engineering in Nigeria, Federation of Construction Industry in Nigeria, Manufacturers Association of Nigeria and armed Forces in rotation, among other functions.”

Source: Vanguard

Seven Questions To Ask A Property Manager Before You Hire

When investing in single-family rental properties, minimizing your operating costs can help you maximize your revenue. Consequently, you might choose to manage those properties yourself to eliminate the expense of having someone else do it. If you have the time, the expertise and a smaller portfolio, there is certainly nothing wrong with that approach.

On the other hand, if your days are busy, you don’t have experience in this area or you own many properties (or intend to), you may find it advantageous to hire a property manager. If that’s the case, you want to be sure that the person has all the skills needed to take property management tasks off your plate.

How To Find The Right Property Manager

The right property manager can be a valuable asset to your real estate operation. To determine if they can handle all the tasks you will be handing off to them, ask these seven questions:

1. How can you help me improve cash flow?

In a perfect world, your tenants would pay their rent on time, and you would get the best deals to minimize expenses. Unfortunately, there are no single-family rental properties for sale in a perfect world. Renters fall behind on their rent, you might not have access to the best pricing from vendors and even understanding things such as which garbage rate plan to use can save you significantly. It’s your property manager’s job to ensure timely rent payments and take appropriate action when tenants fall behind. A good property manager will also help you control expenses and help your business maintain positive cash flow.

2. Do you have experience handling all types of tenant interactions?

Dealing with tenant questions, comments and concerns on even one property can consume hours every month. If you own multiple properties, dealing with your renters can be a significant commitment of time that you would rather be spending on other activities. Having a property manager who can triage tenant issues and only bring to you those that require your attention can be very helpful.

3. Are you knowledgeable in the housing regulations that apply to my properties?

From changing laws to property damage that creates a code violation, there are many ways for you to find yourself in legal trouble. Your property manager should be able to monitor both the regulations in your area and the condition of your properties to ensure you remain in compliance.

4. How can you help me keep units occupied?

A good property manager gets to know your tenants and understands the market. Consequently, they may learn that a renter intends to leave well before they give notice and can leverage their industry connections and the marketing channels that work best in the local market to find new tenants and ensure that your units are never vacant for long.

5. Do you have experience in developing and maintaining vendor relationships?

Vendors tend to provide the best service to people they know and people who can give them consistent work. As a property owner, you might not have time to establish a personal connection with your electrician, landscaper or other tradesperson, and the occasional project on your small portfolio might not be enticing enough to give you the best rates. A helpful property manager has the time to build the relationships, and because they manage many portfolios, they have the volume to obtain favorable rates.

6. Can you help me set appropriate rents?

Setting rents for single-family homes is often more difficult than apartments because each unit is different and there are not as many comparables. However, a property manager can do more in-depth research to zero in on a rent that maximizes your revenue while still ensuring that the property is always occupied.

7. Are you comfortable connecting with me primarily by phone or email?

If you are managing your own properties while also having to tend to other business obligations, your units need to be relatively close to you geographically. If you have a property manager who is able to handle all the operational details for you, you can own properties anywhere in the country, but you want to know your property manager is easily reachable by the communication avenues you prefer.

Managing Your Portfolio As A Business

If you own single-family rentals because you enjoy the social aspect of being a landlord, then managing your own properties probably makes sense. If, however, you are in single-family rental real estate to make a profit, finding the right property manager can be a great way to decrease your stress, increase your revenue and free yourself to focus on your business strategy, your hobbies or that vacation you’ve been meaning to take.

Source: Alex Hemani

Dramatic housing transformation in sub-Saharan Africa revealed for first time

Using state-of-the-art mapping, the study, led by the London School of Hygiene & Tropical Medicine, Imperial College London and Malaria Atlas Project, University of Oxford, is the first accurate estimate of urban and rural housing quality in sub-Saharan Africa. While highlighting the positive transformation in the region, the prevalence of improved housing doubling from 11% in 2000 to 23% in 2015, the study also estimates that 53 million urban Africans (in the countries analysed) still lived in slum conditions in 2015.

Adequate housing is integral to many associated health outcomes including mental health, respiratory disease, diarrheal disease, and vector borne diseases, such as malaria. Addressing the housing needs of a growing population is therefore key to sustainable urban development and the health and wellbeing of millions of Africans.

The researchers say these new data will be vital to guide interventions to achieve the United Nations Sustainable Development Goal (SDG) 11 which aims for universal access to adequate, safe and affordable housing and to upgrade slums by 2030.

Lead author Dr Lucy Tusting, from the London School of Hygiene & Tropical Medicine who conducted the work while at the Malaria Atlas Project, University of Oxford, said: “Adequate housing is a human right. The housing need is particularly urgent in Africa where the population is predicted to more than double by 2050. Remarkable development is occurring across the continent but until now this trend this had not been measured on a large scale.

“These results are a crucial step to reaching sustainable development goals as quickly as possible, and show that African housing is transforming, with huge potential to improve human health and wellbeing.”

To produce these new estimates, the researchers combined data from 661,945 households from 31 countries into a model using an innovative technique that allowed the prevalence of different house types to be mapped across the African continent.

Housing was categorised using the United Nations description, where houses with improved water and sanitation, sufficient living area and durable construction were considered to be improved. Housing lacking any one of these features was considered to be unimproved.

The prevalence of improved housing was highest in countries including Botswana, Gabon and Zimbabwe, and lower in countries such as South Sudan.

The researchers also found that the housing transition may be linked to economic development. Improved housing was 80% more likely among more educated households and twice as likely in the wealthiest households, compared to the least educated and poorest families.

Senior author Dr Samir Bhatt from the MRC Centre for Global Infectious Disease Analysis at Imperial College London said: “These findings highlight that poor sanitation remains commonplace across much of sub-Saharan Africa, which may be holding back progress to improve living conditions. Our study demonstrates that people are widely investing in their homes, but there is also an urgent need for governments to help improve water and sanitation infrastructure.”

Dr Fredros Okumu, Director of Science at Ifakara Health Institute in Tanzania, and a co-author of the paper said: “The changes that we have observed are incredibly significant, especially since households mostly paid for these improvements with their own incomes and no external financing.

“From a public health perspective, this trend presents a massive opportunity for African governments to accelerate ongoing efforts against vector-borne diseases such as malaria, and to secure such gains for the long-term.”

The authors acknowledge limitations of their study including the difficulty of using a single definition to capture the full range of housing conditions across sub-Saharan Africa. The study also relied on national surveys which may not be directly comparable due to variation in their methods and data collection procedures, and which represent a limited sample of African households.

Source: ScienceDaily

U.N. blasts Blackstone Group for worsening the U.S. housing crisis

No less an entity than the U.N. is wading into the U.S. housing affordability crisis. In a pair of letters to the U.S. government and Blackstone Group, Leilani Farha, the UN Special Rapporteur on the right to adequate housing, calls out the role of private equity in the housing market and blasts the federal government for failing to protect the right of people to housing.

Blackstone, the world’s largest private-equity fund, also owns the largest single-family rental operation in the U.S. through its Invitation Homes unit. It’s not the only private equity firm to invest in housing, but Blackstone’s large size and concentration in a few metro areas has made it a dominant player in the rental market, where “it is having devastating consequences for tenants,” the letter said.

“Blackstone’s and its subsidiaries’ business model is pushing low-income, and increasingly middle-income people from their homes,” the rapporteur wrote. Among the tactics it ascribes to Blackstone, drawing on news reports, are purchasing housing for low-income renters and deeming it “undervalued,” renovating it, dramatically increasing the rent and forcing out residents if they can’t pay.

Farha also cites the addition of processing fees, automatic late fees and “immediate” eviction notices if tenants are late with payments. Blackstone disputes the last assertion, calling it “absolutely false.”

More likely to evict

“There are fulsome consumer protections and often lengthy legal processes that Invitation Homes follows to the letter in the rare instances when an eviction becomes unfortunately necessary,” Blackstone wrote in a response. However, large institutional investors are significantly more likely to evict families than smaller landlords, an Atlanta Federal Reserve study found in 2016.

The actions of Blackstone, and other single-family rental companies, displace low-income residents, create instability and have a disproportionately harmful effect on African Amercians, who bore the brunt of the 2007 housing collapse, the rapporteur wrote. And it’s not only Blackstone, she added, noting that the very model of a profitable investment backed by thousands of renters runs counter to the idea of housing as a human right, which the U.S. purports to endorse.

“Contrary to international human rights obligations, investment in housing in the United States of America has disconnected housing from its core social purpose of providing people with a place to live in with security and dignity,” Farha wrote.

In its response, Blackstone said Farha’s letter “contains numerous false claims, significant factual errors and inaccurate conclusions,” but it rebuts few of the facts. Blackstone pointed out that in many of the areas where it operates — such as Seattle and California — renting is cheaper than owning. It also said the assertion that Invitation Homes overcharges rent is unfair and “is not supported by economic theory.”

In a separate letter to regulators, Farha took aim at countries, including the U.S., that encouraged the formation of the single-family rental market. The U.S. Department of Housing, for instance, sold nearly 180,000 delinquent mortgages to private equity groups shortly after the financial crisis, in a transaction that required no protections for current or future residents in those houses.

She also criticized reliance on tax breaks to finance U.S. homeownership — a tactic that benefits the wealthy — and the government’s reluctance to protect renters. And the rapporteur called out the Czech Republic, Denmark, Ireland, Spain and Sweden, where Blackstone also operates. Said Farha in a release: “We want to alert States and private equity and asset management firms that the financialisation of housing in its current form runs afoul of international human rights norms and cannot continue.”

Source: Irina Ivanova – CBS News

Brexit and the social housing sector: the key risks

At the time of writing – with the situation prone to change quite quickly – the UK is set to leave the European Union on 22 May if Ms May’s deal can pass a vote in the House of Commons. If it cannot, it has until 12 April to make an alternative plan – which may involve anything from a long delay, to a second referendum, to an immediate ‘no-deal’ exit.

In the midst of this, Parliament is seeking a series of ‘indicative votes’ to test whether any Plan B option could win a majority, but this is being opposed by Number 10. Meanwhile, a third ‘meaningful vote’ is widely tipped to happen today (Tuesday) but had not been confirmed at the time of writing.

Here, Inside Housing presents a short briefing on why the risk of a no deal in particular has parts of the sector so worried:

1. A housing market crash

The UK appears to be operating a two-pace housing market at the moment, with deals continuing across most of the country but the market grinding almost to a halt in London.

This is affecting housing association developments for both outright market sale and shared ownership, which in return is reducing the viability of schemes dependent on this income.

The big stories in this area so far have been L&Q announcing a halving of its annual profit to £190m, with its sales performance £60m behind target. Meanwhile, it has emerged Notting Hill Genesis has some 400 unsold homes on its books, with other landlords describing a “massive slowdown” in transactions as people wait to see what happens.

If Ms May can’t get her deal through, then the best-case scenario is a long delay, which means a long period of uncertainty.

The good news in this respect is if the uncertainty lifts there is a chance that the pent-up demand will result in a bumper few months of sales. The bad news is that if Ms May can’t get her deal through, then the best-case scenario is a long delay, which means a long period of uncertainty.

The worst-case scenario is a no-deal exit triggering a full-on crash: mayor of London Sadiq Khan has warned that in this outcome some 9,000 homes will need to be converted to rent and the profit loss to associations covered by £5.2bn of government grant. There has been no confirmation from government that this, or anything like it, would be forthcoming.

If it isn’t, it remains to be seen how well housing associations would cope. But the safe bet is that development would be severely reduced, and coming at a time when private builders would almost certainly be turning the tap off as well that is a serious risk not just to the sector but the economy.

While associations based outside London are currently more sanguine about the current uncertainty, there is no guarantee that the problems in the London market would not spread outwards if there was a no-deal exit.

2. Shortages of materials

The UK has a £10bn trade deficit on construction materials. Some 60% of these materials are imported from the EU and this is just an average: 92% of our softwood timber comes from Europe. This doesn’t just hit new build; housing associations are reliant on imports for crucial repairs including many boiler and lift systems.

Rebecca Larkin, senior economist at the Construction Products Association, points out that the likely depreciation in the pound would raise the costs of these materials immediately. Just as worrying is the fear over delays in delivery as ports become clogged up.

Construction tends to work on the basis of ‘just-in-time’ delivery, and if the materials suddenly stop arriving, deadlines will be missed, time on site increases and costs will rise at the same time as a potential housing market downturn is reducing income.

3. Shortage of labour

The key risks here are said to be in the care sector and construction, where a combined 10% of the workforce come from the European Economic Area.

Again, though, this is magnified in London. The Home Builders Federation estimates that 19.7% of builders on residential building sites across the UK were from another country, rising to a whopping 56.3% in the capital. Of course, even the hardest Brexit contains no proposal to actively send these people home but many are temporary workers and may struggle to return if a tougher immigration policy was imposed.

Similarly in care, the 10% figure may mask a bigger problem: 19% are thought to be from another country and the rising demand resulting from the ageing population means some 3,000 a year more are needed.

The current immigration plan to focus on ‘skilled labourers’ earning more than £30,000 a year will cut out most of this workforce. The government is yet to commit to any exceptions for either category of worker.

4. The wider economy

Soaring inflation would have an impact on costs across the piece, and while this would be somewhat ameliorated by the power to raise rents at above inflation from 2020, the political, economic and social implications of doing so when housing benefits and wages may not keep up put a de facto cap on this ambition.

At the same time, if interest rates were to soar it would add to the amount housing associations have to repay on any variable rate debt.

The regulator estimates 70% of the sector’s debt is fixed for at least one year, but also warns a 2% increase in Libor (the rate at which banks lend to each other, and a benchmark for many sector loans) could theoretically increase the sector’s annual interest payments by £400m a year. At the same time, rising interest rates (the Bank of England has estimate 5.5% as the upper threshold possibility) would reduce the amount of people who could afford mortgages and potentially see homeowners without fixed-term products pushed to default.

Factory closures and unemployment, if the worst effects of a no-deal Brexit were to come to pass, may leave many more tenants subject to the harsh reality of Universal Credit – with the rise in rent arrears that usually follows.

5. Political upheaval

The sector has been lucky in the past three years to have had a relative ally in the form of Theresa May – who has made addressing the housing crisis a personal political priority and instituted a number of favourable policies for the sector: cancelling the rent cut from 2020, increasing grant for social housing and scrapping the borrowing cap.

With the mounting speculation that the price for a deal may be her resignation, whoever follows is highly likely to represent the Brexit arm of the Conservative Party, which typically lean to the right on housing policy. The long-term political consequences of Brexit are almost impossible to play out, but the sector must be mindful of the possibility that whoever follows Ms May into Number 10 will be far less positively minded towards them.

It is a mere four years since the sector was the subject of hostile policy making driven by the prime minister’s office and while the political climate could get better than it is now, it could also get a lot worse.

Source: Peter Apps


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