Member Article

Tesco Help to Boost UK Housing Supply

With the shortage of housing in the UK a constant subject in the news, the time has come for alternative investors to step forward and help to increase the current supply to fit the demand.

The Governor of the Bank of England, Mark Carney, commented back in May; “At 123,000 units per year, house building remains well below the 200,000 many economists consider to be the minimum needed.” With this in mind, the news that supermarket giants, Tesco, plan to build 4,000 homes across the country by 2017 is a promising start.

The company owns 310 unused sites throughout the UK and now plan to use some of the land they own to construct new residential developments over the coming years – a building plan totalling £1 billion.

So far, the sites listed in August’s issue of Property Week are all located in the south of England “but developments are also scheduled further north, including Liverpool and the west of England.” Plans in Liverpool include a development of two and three storey homes; “The company’s property-owning offshoot, Spenhill Developments, has applied for outline permission for 37 homes on a site at the junction of Aigburth Road and Tramway Road, once occupied by St Augustine’s House.” As well as building homes via their own development company, Tesco also plan to sell some of their sites to other developers, further encouraging the boost in house building that is needed.

Tesco are not the only supermarket choosing to take the route into residential housing development – 4,500 more homes are expected to be built by other major grocers between 2013 and 2018. “J Sainsbury is set to begin projects involving more than 1,500 homes this year, including a partnership with Barratt on a major development in Battersea, South London, which includes 700 homes and a new tube station.”

Pension funds are also being considered as financial solutions for new housing, with the Greater Manchester Property Venture Fund (GMPVF) set to focus its £300 million investment pot on developing residential schemes within the city. Their plan is to focus on housing to increase the amount of residential property in their portfolio, sticking to a similar idea as their partnership venture with Manchester City Council on the Matrix Homes project - which will deliver 240 homes across five sites to the city of Manchester. Partnerships all across the country are proposing plans to tackle the housing shortage – Legal and General included. Earlier this year they announced a £252 million investment - “the largest direct investment into the sector to date.” This funding is to be used to build 7,000 properties over the next seven years.

Not only will these proposed plans help to tackle the housing crisis in the UK, but they will also boost the economy. Jobs will be created in the construction industry, fuelled by this demand for new homes. Going back to comments from the Governor of the Bank of England, it is the shortage of new homes that is currently driving house prices up so rapidly in Britain, and this could be exactly what is needed to steady things and make growth more sustainable.

Sources

The Guardian, Liverpool Confidential, Places for People, and Property Week.

This was posted in Bdaily's Members' News section by ERE Property .