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Legal And General Build To Let


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#1 ferdinand

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Posted 24 February 2016 - 06:46 AM

An interesting interview with Legal and General wrt their getting involved in build to rent.

One of the numbers mentioned was a possible £15bn investment fund for new housing, and another £15bn one for renovating/replacing existing. Not sure that I believe those numbers but it is on a suitable scale.

They admitted that it was mainly about securing stable income for their pensions and that UK housing looks a good place to invest, which is true if they can fix planning and not get nobbled by politics.

The idea seems to be offsite pre-build with no trades involved at all. Which sounds like a suitable way to take out cost, but whether they can get cost below £1000 per sq.m and stop it looking like Levitt Town UK will be interesting. They claim to have studied best offsite manufacturing practice.

I think this is what Mr Osborne has been hoping for.

Quite how they will deal with the Planning System will be interesting.

Interview here at Today Programme 6:25 ish 24/2/2016 when it appears:

http://www.bbc.co.uk...rammes/b071ftsq

(Levitt Town Pennsylvania: https://en.wikipedia...LevittownPA.jpg). There are some interesting features of Levitt Town, such as attics to be expanded into later, floor areas of 700-1000 sqft, prices to set mortgage costs at rental levels, no-down payment mortgages, and population densities of 7,500/sq mi..)

Article about Levitt Town New York: https://en.wikipedia...ttown,_New_York

Ferdinand

Edited by ferdinand, 24 February 2016 - 07:01 AM.
sqm to sq.m


#2 DavidFrancis

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Posted 24 February 2016 - 07:31 AM

A related item by L&G's chief executive
http://www.cityam.co...-market-failure

#3 Triassic

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Posted 24 February 2016 - 08:08 AM

The good thing about Levitt Town is the houses were built with space around them, allowing owners to extend as the family grows.

Here in the UK rabbit hutches as stacked one on top of another, with no space, we also have the smallest house being built in Europe.

Off site construction takes place every day and I regularly see homes being hauled up and down motorways, they are called park homes. Maybe this is what we need to fill the current gap?

#4 SteamyTea

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Posted 24 February 2016 - 12:01 PM

View PostTriassic, on 24 February 2016 - 08:08 AM, said:

Here in the UK rabbit hutches as stacked one on top of another, with no space, we also have the smallest house being built in Europe.
I think this is the biggest problem with UK housing. It need not affect the construction cost, and basic economic supply and demand theory will take care of land values.
It is getting rid of the entrenched view that housing is expensive, that it will always increase in real value and people need to work hard, while making personal sacrifices to become owners.

#5 ProDave

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Posted 24 February 2016 - 12:11 PM

There is noting new about modular off site built homes, and no reaon why they need to be built to poor standards like park homes.

There is a small builder who has been doing just that for at least 10 years up here.

But I don't get the bit about they can do it without tradesmen? the guy I know employs carpenters, electricians, plumbers, tilers etc, it's just they work a lot more in a factory rather than on site.

#6 SteamyTea

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Posted 24 February 2016 - 12:54 PM

A decent production facility does not need trades on the shop floor, that is the whole idea of it.
Anything that cannot be automated, and a lot of timber frame house building can be, is broken down into simpler tasks and a worker trained up to do that task.

Ultimately, trees should go in on end of the factory and houses come out the other.
Simple erection on site, bit like Lego/Meccano, is all that is needed.
Plumbing and electrical work would be simple push fit connections.

Works well in the car industry, and we make more square metres of cars than housing per year.

Edited by SteamyTea, 24 February 2016 - 12:54 PM.


#7 ferdinand

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Posted 24 February 2016 - 01:10 PM

View PostSteamyTea, on 24 February 2016 - 12:54 PM, said:

A decent production facility does not need trades on the shop floor, that is the whole idea of it.
Anything that cannot be automated, and a lot of timber frame house building can be, is broken down into simpler tasks and a worker trained up to do that task.

Ultimately, trees should go in on end of the factory and houses come out the other.
Simple erection on site, bit like Lego/Meccano, is all that is needed.
Plumbing and electrical work would be simple push fit connections.

Works well in the car industry, and we make more square metres of cars than housing per year.

True, yet the services and perhaps finishes have to be the major saving, as eg Space4 already have very efficient building of the structure and shell on site in less than a day (excl. perhaps windows) direct from their factory.

But the raw construction/services cost is only about 25%, so halving one part of that - trades etc on site - can only be a marginal saving of around 5%.

How are they going to halve service connections costs, Section 106, CiL, planning overheads and land :P :o :rolleyes: ?

Ferdinand

Edited by ferdinand, 24 February 2016 - 01:12 PM.


#8 SteamyTea

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Posted 24 February 2016 - 01:32 PM

Comes down to which parts of construction we have inflated the price of in recent years.
We have inflated land values and professional fees way to much. There is a lot of cash savings to be made there.
CIL/S106 is probably open to negotiation, possibly why L&G are entering the social housing market.

Pulling out of the EU will have a huge affect on property values, initially it will push them up, then they will crash to affordable levels.
No one is making any long term plans till after the results, especially EDF.

#9 ferdinand

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Posted 24 February 2016 - 05:30 PM

View PostSteamyTea, on 24 February 2016 - 01:32 PM, said:

Comes down to which parts of construction we have inflated the price of in recent years.
We have inflated land values and professional fees way to much. There is a lot of cash savings to be made there.
CIL/S106 is probably open to negotiation, possibly why L&G are entering the social housing market.

Pulling out of the EU will have a huge affect on property values, initially it will push them up, then they will crash to affordable levels.
No one is making any long term plans till after the results, especially EDF.

Heh. Current assessment of leaving the EU is about 25%.

F

#10 SteamyTea

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Posted 24 February 2016 - 06:01 PM

25% downwards?

#11 ferdinand

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Posted 24 February 2016 - 06:35 PM

View PostSteamyTea, on 24 February 2016 - 06:01 PM, said:

25% downwards?

25% probability give or take.

A fairly well reasoned assessment imo:

Quote

How likely are each of these probabilities? Candidly, I’m not that sure, so I’m going to assign them fairly arbitrarily in an approximate bell curve distribution 25% Leave win, 50% narrow Remain win, 25% big Remain win. You can adjust the percentages to personal taste, of course

http://www2.politica...ext-con-leader/

Ferdinand

#12 oz07

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Posted 24 February 2016 - 07:27 PM

Why would property crash should we exit EU?

#13 SteamyTea

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Posted 25 February 2016 - 07:02 AM

We will be trading with less people initially.
Also, it is easy at the moment to move cash around Europe, that would not be the case if we leave.

Generally, in times of economic uncertainty, people look to invest in low risk assets. Property in the UK has generally fitted into this category.
This inflates existing asset prices (it does not generate any new wealth or income). What keeps asset prices in a depressed state is low incomes and high interest rates, which are just peoples incomes and outgoings really.
So if you decrease your easily accessible market size, by 400m customers, or have barriers that make that market harder to trade in (taxes, standards, agreements etc), then you potentially have lower income.
Too get around this what generally happens is the the exchange rate changes to compensate (the £ has weakened already). This can help our export markets, but drives overseas investment away.
In the past the government of the day could adjust interest rates to attract overseas investments to our shores, but we saw what happens with that sort of meddling when we dropped out of the ERM in September 1992, a few months before all the European trade barriers where dropped.
Part of the reason that the last Major government and the first Blair government seemed to be financial successful was more to do with the EU market being open, making trade really easy, than the low interest rates (about 8%, double long term inflation rate).

Edited by SteamyTea, 25 February 2016 - 07:04 AM.


#14 ferdinand

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Posted 25 February 2016 - 10:12 AM

View Postoz07, on 24 February 2016 - 07:27 PM, said:

Why would property crash should we exit EU?

I'm talking about probabilities of Out winning, not property crashes.

If Out win, I don't think it will crash unless (I hope) it did mildly in London. 10-20% off house prices in London would be a good thing.

I don't see an exit inhibiting trade very much either.

Ferdinand

Edited by ferdinand, 25 February 2016 - 10:13 AM.


#15 ProDave

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Posted 25 February 2016 - 10:32 AM

You only have to look at what's happened up here, to find that uncertainty has killed the market. We don't any longer have hoards of English men wanting to move to the Highlands and buy our houses.

I fear there's lettle hope of me selling my house before the EU referendum. My heart says I want to vote out because I hate all the petty EU rules imposed on us. But the reality check says I might vote to remain in for the sake of a stable housing market, on the basis a house price crash can do me a lot more harm personally than anything the EU can throw at us, particularly as I am nearing retirement so a lot of the petty rules will become irelevant to me then.

Edited by ProDave, 25 February 2016 - 10:34 AM.