Catherine Kennedy Forbes For Comment Piece Dec 2021

COMMENT | Risk will influence housing trends in 2022

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Housing has shown a great deal of resilience and recovery, both this year and during 2020, writes Catherine Kennedy of Forbes Solicitors. This will lead to risk shaping housing sector trends in 2022.

Risk management will prove so influential next year because of the growing importance of quality standards and governance, and the increasing amount of diversification and reinvention we’re seeing throughout the sector.

Quality standards

Levelling up is high on the government’s agenda and this largely involves improving housing standards by better respecting residents.

The Department for Levelling Up, Housing and Communities plans to publish the government’s white paper on reforms to the private rented sector in 2022. An exact date is still to be confirmed, however, it is likely that the PRS white paper will echo many of the housing policies and reforms that we’ve seen throughout various parts of the sector during the past couple of years.

For example, the social housing white paper (Nov 2020) is heavily focused on giving residents a voice, whilst the Housing Ombudsman Complaints Handling Code (July 2020) is designed to better address tenant concerns.

The PRS white paper will bring similar reforms, empowering tenants to improve the standards of properties and maintenance. Landlords throughout the private and public sectors will need to ensure they’re proactively managing and evidencing risk throughout their organisations to put residents first. This will involve a growing focus on documenting resident concerns and showing timely resolutions that achieve satisfaction among renters.

Governance

One of the biggest indications of the growing importance of governance for the housing sector can be seen at Homes England. The government’s housing agency has identified areas for improvements and accepted there were ‘significant weaknesses’ in terms of governance and risk management.

The agency is now focusing on improving its control environment, which involves the transition from old and ineffective systems. It is a timely reminder for housing providers of any scale that governance is taken seriously at the very top and that, when it comes to risk management, the government is aiming to lead by example.

Reinvention and diversification

The way people live and work has been changed by the pandemic, with hybrid working fast becoming the norm. This is causing planners, developers and landlords to rethink urban spaces and an increasing number of mixed-use schemes.

These developments bring together living, leisure and work, and blur the lines between residential and commercial property expertise. This will drive a growing trend of joint ventures that comprise a mix of private and public sector organisations. Whilst this will present new opportunities for the housing sector, it will also create new complexities and risks that will require thorough due diligence to keep projects on time and budget. Partnership agreements and frameworks will need to be properly structured to ensure clear lines of responsibility and accountability.

Recent months have seen large corporates diversify investment interests. Lloyds Banking Group has moved into the buy-to-let market, which could see it become Britain’s largest private landlord and could also accelerate the growth of build-to-rent models.

Build-to-rent markets are often associated with no hidden costs, added value services and generally higher quality service delivery. The arrival of a well-financed bank and heightened competition could raise the benchmark for these services, while also potentially driving down rental prices. Considered risk management will be required among traditional house builders and landlords to adjust to a market where tenants expect more flexible terms and conditions.

Undoubtedly, there will be many more opportunities and challenges facing housing next year. The sector is evolving at pace, with a rate of change accelerated by the impacts of the pandemic, and it is difficult to wholly predict what will happen next.

One certainty though is that risk management will become increasingly complex – and possibly more fragmented – as the sector continues to adapt.

Forbes Solicitors’ 70 strong housing group is well prepared for the times ahead, offering clients a rich mix of housing and regeneration sector experience, the full range of property and litigation services, along with procurement, governance, information and employment law. We can provide seamless advice and timely solutions to help housing sector clients keep ahead in a fast-moving market in 2022 and beyond.

  • Catherine Kennedy is head of development and head of housing and regeneration (property) at Forbes Solicitors

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