Former Clarion Housing chief executive Keith Exford has taken a consultancy role with CBRE to help establish a new affordable housing division.
Working with Andrew Purdon, senior director in the London development team, he will help set up a full service department to advise the growing number of housing associations competing with the private sector.
Exford is a grandee of the affordable housing world, and led Affinity Sutton into its merger with Circle Housing in 2016 to create Clarion, one of the UK’s largest housing associations, with 125,000 homes nationwide. He announced his intention to retire in 2017, before stepping down a few weeks ago.
Under his tenure Clarion became one of a new breed of housing associations using mixed-tenure development to self-finance schemes, with private sales and rental flats financing social housebuilding aims.
Development intentions
Clarion, like Peabody, L&Q, Places for People and Hyde, has announced huge development intentions over the next decade: something CBRE wants to tap into. To do that, Exford says consultancies need to have the right expertise in place.
“For housing associations, I am the first to acknowledge that when moving up from affordable housing to offering a mixed tenure offer across a range of markets, there is going to be a learning curve,” he says.
Purdon says housing associations have become some of the most active buyers in outer London, and the move is logical.
He says: “We have seen more activity from housing associations being very competitive on land deals. They have a big growth agenda, and they have a stated aim to increase their development output. As far as we are concerned they are very powerful developers in their own right.
“The way we are approaching the opportunity, we provide advice to all the major housebuilders in London, we are simply trying to communicate with a new audience who are competitors to those developers.”
Many thought housing associations were dealt a killer blow in 2015, when then chancellor George Osborne announced rent reductions and the extension of Right to Buy to their assets, on top of funding cuts.
Mixed-tenure development
However, larger players in the sector have found a new lease of life. Alongside the ability to finance through mixed-tenure development, they have been able to borrow relatively cheaply using their balance sheets. They have also found themselves popular with local authorities seeking to increase affordable housebuilding.
Exford hopes to help play a brokerage role between the associations and commercial actors, marrying private and public sector objectives and money, and says he wants to focus on build to rent, regeneration and, strategic land deals.
“I am really interested in the build-to-rent market and there is a real opportunity there,” he says.
“We know the institutions are keen to invest, but they are not desperately keen to manage product or development processes… Associations are geared up to do that long term management.”
He says that strategic – large scale – site deals in the next few years will be of critical importance, as they will allow housing associations to make a serious dent in housebuilding targets. Due to their multi-tenure sales approach, homes will be built faster. Partnership arrangements – either with the private sector or local authorities – will be a key part of that.
“That’s where the big property consultancies can help, because they are working with the big clients already, on residential and wider property consultancy,” he says.
Adding expertise
Purdon says CBRE will be setting up a standalone team to focus on housing associations.
“We are focused on land, planning, JVs and funding solutions, that’s where we think we can add the expertise,” he says.
“My belief is we will see a lot of JVs formed between housing associations and residential housebuilders to accelerate the performance of the two businesses.”
But while the sector may be growing exponentially, Exford says the shift to multi-tenure development will be a learning curve. He alludes to past mistakes where one or two errors have damaged the whole sector.
“If they want to work at scale and operate in mixed-tenure programs, where some elements of the programme are market dependant, then they have to work in different ways, and that is where the big consultancies can help them make that transition,” he says.
“Not to in any sense surrender their social purpose or values, but to recognise if operating in a more risky environment you need to take appropriate measures to manager that risk.”
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