PfP’s Cowans on collaboration, consumerism and community

Places for People chief executive David Cowans swings back in his chair, as he muses on the intricacies of unlocking large regeneration sites. “Earl’s Court? I wouldn’t go near that site, not with those problems,” he says. “There are two issues with these sites: how do you unlock them and how do you fund them? The danger is they become the same question.” Places for People specialises in large, often residential-led regenerations. But Cowans says the “curse of planning” and the political wrangling at the 77-acre Earl’s Court site would be a major deterrent. He says: “There will be tension. There’s the desire from the state to solve problems of infrastructure. If you don’t think it drives value and you see it as a cost, you’ve immediately got a stand-off.” But PfP is no stranger to working with local authorities and providing community services. At its £200m Runnymede regeneration it is developing a £19m leisure centre on behalf of the council. It was able to do this through experience off the back of its Places Leisure venture, which operates more than 100 leisure centres across the UK. “Does that make a difference when we bid? Sometimes, yes,” says Cowans. The acquisition and development of specialist companies has been a major strategy for PfP expansion. The former housing association and now self-proclaimed “placemaking pioneer” has more than 20 companies across affordable housing, property management, student accommodation, retirement, care homes, financial and capital services and even modular housing. [caption id="attachment_987169" align="aligncenter" width="847"] Urban Splash’s Smith’s Dock scheme in North Shields will become a modern coastal community[/caption] Off-site ambitions PfP acquired ModularWise in 2017 and has since delivered around 120 modular homes from the factory in Wales. Add to this various partnerships with Urban Splash, ilke Homes and Södra’s Trivselhus, and Cowans estimates the group has delivered around 600. And this number is set to rise significantly. In May, Places for People acquired 750 modular homes from ilke Homes in the biggest MMC deal in the UK to date. The homes will be delivered largely through PfP’s strategic partnership with Homes England, on regional sites in Cornwall, the West Midlands, Yorkshire and Cambridge. “I’ve got two ambitions with off-site manufacturing,” says Cowans. “One is to get it to the point where it is consistently improving the quality, within an envelope that deals with cost issues. The second is to find people to work with us, so we can boost the total market.” One way that PfP is doing this is through its DIY housebuilding platform Design Your Home. Cowans says this product satisfies the consumer demand for “property porn”, allowing people to select from up to 20 variations with different layouts, materials and design finishes delivered via off-site manufacturing. He says: “We wanted to work on the idea that people could do a mix of custom-building and we would be their agent.” The group’s first development using this technique is Squirrel Wood in Basingstoke, which has planning consent for 122 homes, with prices starting at £350,000. PfP will extend this to two new sites in Swindon. On the final site, Cowans says it will use four or five different off-site manufacturers. The partners are still to be confirmed, with two new providers currently negotiating agreements. “Our approach is to test the homes in the market to learn what society wants,” says Cowans. He argues this “consumerist” approach provides choice, but also generates competition further down the supply chain to fine-tune the product. We are going into a global recession in 2020. If we had somebody who worked to pull together the public and private sectors, that could make the biggest difference There are still teething problems to iron out, from obtaining planning permission, groundwork and warranty arrangements to buyer access to government schemes such as Help to Buy and mortgages, but PfP is seeking ways around this and hoping to cajole the industry, with a focus on geographical spread over hard targets. Cowans says growth will be incremental, which is a shift from its recent bold ambitions, particularly on the build-to-rent front, where PfP has committed to deploying £1.4bn into the market. Build-to-rent barriers Eighteen months ago, PfP’s asset management arm, PfP Capital, launched a £550m fund, seeking to raise third-party capital to forward-fund developments, with the goal to deliver 3,000 homes. But the fund has failed to raise the capital and has been forced to change approach. Despite having three pilot schemes, investors wanted greater evidence and built stock. “It is a relatively new asset class, and there are some people who doubt its veracity. We believe in it, but we need to work through the details,” says Cowans. “We are going into a global recession in 2020 – most people are pulling their horns in. If we had somebody who worked to pull together the public and private sectors, that could make the biggest difference.” [caption id="attachment_987173" align="aligncenter" width="847"] Urban Splash is creating a whole new neighbourhood at Port Loop, just 15 minutes’ walk from Birmingham city centre[/caption] PfP’s second BTR fund is its £330m partnership with the Universities Superannuation Scheme, in which USS provided the finance and PfP acts as asset manager, with its property management business Touchstone on the ground. PfP made an initial £160m acquisition on formation of the partnership, but has yet to make further acquisitions. Cowans says the cash will be deployed over the next two years. In Scotland, PfP has had more success with its £150m Mid-Market Rent fund, providing 100% affordable homes, backed by £47.5m in grant funding from the government. This year it made two acquisitions for a combined £22.8m that will provide 151 homes, against a target of 1,000. “The Scottish Government has cleverly reimagined the grant,” says Cowans. “The investment is made into that fund – they haven’t given it to any individual organisation, but they can decide what they want to do with it any time they like.” He believes there is a big potential for this structure in England. In the way that PfP’s Urban Transformation fund enables local authority pension funds to invest in housing delivery, Cowans says an affordable fund loaded with grant finance could provide “additionality” while also ensuring returns to attract private sector capital. This is a controversial space, but one that PfP is at home in as one of the first to invest private capital into the affordable housing market. “Any form of finance could be brought to bear to build affordable housing. If they come and produce properties that weren’t going to be produced before then that’s fine,” says Cowans. He points to similar examples with Homes England investing in Sigma Capital’s funds, but adds: “There has been nothing like this targeted at specific affordable proposition.” Collaboration from the private sector and the state is a running theme for Cowans, be this through backing BTR funds, delivering parcels of land for mid-market rent or even unlocking those infrastructure-dependent, complex sites, like Earl’s Court. How PfP is maximising its social impact Places for People was the first social housing provider to be listed on the London Stock Exchange, using commercial methods to provide affordable housing. But its social impact extends beyond its £3.5bn housing portfolio: Technology: The Social Value Dashboard, created in partnership with Reason Digital, is used to measure the social impact of PfP initiatives through apprentices, supporting tenants into employment and training activities. It estimates that the group generated £85m in social value last year. Community investment: PfP has a tenure-diversification scheme called Homechoice, which it launched in partnership with the Homes & Communities Agency (now Homes England). The initiative reinvests surplus from sold properties into neighbourhood sustainability projects. It has generated £1m in surplus and used this to drive projects such as the Somali Golden Centre of Opportunities, which provides training for Somali and African communities in south Manchester. Health and wellbeing: Places Leisure has partnered with Level Water to offer free swimming lessons for children with disabilities and children under the age of eight. The company is now working with the NHS, which is providing prescriptions for people with pulmonary disease to take free classes. Sustainability: A pilot in Blackburn as part of the DREEAM initiative will see PfP deliver energy-efficient homes at scale. The homes use external wall insulation, efficient storage heaters and solar panels to cut the carbon footprint and are monitored to educate future iterations.   To send feedback, e-mail emma.rosser@egi.co.uk or tweet @EmmaARosser or @estatesgazette