The late Berkeley Group chief executive Tony Pidgley once noted in a speech that his mentee, Marc Vlessing, succeeded because he came into the housing sector knowing next to nothing about housing.
As Vlessing remembers, Pidgley said of him: “What he did know was to ask a question which we weren’t sufficiently asking ourselves back in the early 2000s: how would the squeezed middle get on the first rung of the housing ladder if we didn’t build enough housing generally and specifically for them?”
That was the thought behind Pocket Living, the affordable housing company that Vlessing launched as chief executive in 2005.
In his previous career, Vlessing was in the entertainment business, running his own production company for close to three decades. One of his proudest productions was The Gambler, an adaptation of Fyodor Dostoyevsky’s book of the same name, starring Michael Gambon, Dominic West and two-time Oscar-winning actress Luise Rainer, in 1997.
Film-making is not that different from development, he argues. Both centre on “spending a huge amount of money very quickly with a multidisciplinary team, taking big capital risk and management issues”.
“It’s about bringing the creative side of your brain and the operational side of your brain together,” he says. But he admits his day job now comes with a bigger sense of accomplishment.
“With Pocket Living I know that I’m changing people’s lives for the better,” he adds. “I genuinely can’t say that any of my films changed people’s lives for the better.”
Serving the middle market
Vlessing set up shop with the belief that a lot of professional people could not afford to live on their own in central London near their places of work.
“I spoke to a lot of people regarding this issue, and I remember speaking to a headmistress of a secondary state school who said the average stay of her teachers is 18 months,” he says. “The number one reason they gave for leaving their jobs was housing availability.
“It became apparent to me that there was just this little market of perfectly well-earning, decently educated, aspirational people – and what was going to happen to the city if they were slowly but surely being priced out?”
Pocket Living’s targeted customers are those who Vlessing calls “city makers”; people living and working in London, between the ages of 28-32, earning between £30,000 and £45,000. Teachers, nurses, chefs, engineers, designers and “web wizards”, in both the public and private sectors.
“The fact this demographic can be narrowly defined does not mean they are a small group,” Vlessing says. “They are the largest economic group in the city and without them it was going to be difficult to run such a complicated, large world city.”
These are people who cannot afford to buy on the open market but also earn too much to qualify for social housing, Vlessing says. Pocket’s homes are sold outright to buyers at a 20% discount to the local market. Purchasers must live or work in the local area and will own 100% of their property from day one.
Build-to-rent
Over the past 18 years, Pocket Living’s business has evolved from a strictly for-sale model to including build-to-rent in its portfolio. The company has 1,200 homes in its portfolio, with a pipeline of 1,600.
Chief development officer Thomasin Renshaw said: “We have noticed that the same thing that happened to the for-sale market is happening in the rental market. Hence we are increasingly looking at rental schemes.
“People are leaving London. Rents have gone up so much that they cannot stay in the rental market. It’s this whole shift in terms of the same problem repeating itself, which we should have been able to foresee. Politicians are starting to pick up on that. I’m speaking to a lot of politicians around London who are saying they want to shift their policies in favour of build-to-rent development.”
In line with Pocket’s BTR ambitions, the developer received planning approval from the Old Oak Common and Park Royal Development Corporation for its first major BTR scheme, the Atlas Wharf development in the Old Oak Opportunity Area, last year.
The development will provide 457 BTR homes, with 35% marketed at affordable rents. At the time, Renshaw said the developer “is uniquely focused on creating affordable access to London for middle-income earners, who rely on the city for their career, personal growth and social lives”.
She added: “That is why our mission is to help them make London their home, whether it’s a one-bedroom discounted home for sale or a rental home.”
What can politicians do?
Vlessing says the biggest surprise in his years in the property sector is that, even after 12 years of a Conservative government, the country has not found ways of unlocking the “middle market” effectively.
He said: “To me, a vibrant economic society is one that caters to all levels, and it has now become an accepted thing to say people who have suffered the most socially, politically and economically are the middle classes and their children.
“If I had said that 20 years ago, I would have been shot, but you can’t journey through Brexit and not appreciate as a politician that your middle market is a big sticky problem. We need to build a lot more housing for those folk.”
Staying with government, Vlessing believes the property sector is heading into a world where there needs to be “more adaptive regulation” – rent control is problematic, but regulation is needed to make sure the system caters to a variety of needs.
“For some people, it’s a discounted rent, for others it’s discounted purchase,” he says. “For some people it will have to be a discount of 5%, 10% for other people, or 20%.
“And if you don’t want to do that stuff with heavy subsidy, then you need to be quite clever in how you manage the planning process. That is where we’re struggling in New York and in London, because the easy answer is no longer available, which is subsidising.”
Vlessing says that companies like Pocket Living become “interesting study areas for the success or otherwise of public-private partnership, because endlessly we’re working between the public and the private”. He adds: “What we really are desperate for is better engagement with the public sector.”
He says the fact this engagement is still not as it should be is one of his biggest disappointments.
“We are not planning our country in a dynamic way,” he says. “Levelling up is not just about putting our money into the North East or the North West – levelling up is about building the housing that is needed, where it’s needed. Levelling up is about inter-generational levelling up. Levelling up is about running a dynamic economy which understands that we are hugely imbalanced with an overactive South East.”
Where from here?
Adding weight to his words, Vlessing says Pocket Living is now looking to do more outside of the capital, as it’s time to “de-Londonise the economy”.
He says: “London has got so many issues now, it is hard to see how it’s going to return to the kind of vibrancy and opportunity that we had 10 years ago. It is painful to go through, but we do need to de-Londonise the economy. We need to create economic hubs outside of London, and we do need people to move around the country better.”
Pocket Living is present in 22 London boroughs. To move out of the capital, Vlessing believes the company will need help from Homes England and city councils. In other cities, Pocket Living would be looking for developments ranging from 50 to 200 discounted for-sale and for-rent homes.
“The best way to get us, is to reach out to us,” Vlessing says. “It may seem like a very unusual idea to reach out to a developer, but we are a very unusual developer. We are nice, we are hard-working and we are not greedy. We have a very clear niche, and we believe that this niche needs looking after across the country – not just London.”
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