Opinions and insights from our Development and Planning team
Joint ventures: An answer to the national housing crisis?
- AuthorShruti Trivedi
It’s no secret that the UK is facing an extreme shortage of homes and a consistently rising cost of living. It has been reported that since 2010, the number of new government-funded social housing has fallen off a cliff. Even with schemes such as Help to Buy and the changes to Stamp Duty more recently, there is still a major gap to fill.
In the most recent House Price Index figures, we can see the cost of a home is edging close to £350,000. This is a significant leap from the same time last year and a reminder that the housing crisis continues for the UK. For first time buyers, prices are averaging £214,000 and we have just been informed by the Bank of England that inflation is expected to increase to seven per cent by spring 2022. Having a wider choice of different priced homes, varying sizes and locations is key to ensuring more people can get on the property ladder.
Part of the problem that I encounter in my work as a planning solicitor, is the hoops developers must jump through in order to secure planning permission. It’s also a contentious issue, with communities often fearing the changes that will come with an influx of new-build sites and potential impacts on highways and infrastructure.
I have seen with some of my clients that opting for a joint venture scheme can help when it comes to complex developments – not only can two minds be better than one, but the pooling of resources this brings is significant. This can be especially helpful for larger projects, with different layers, where such approach comes into its own. It’s likely to give the scheme more promise, and trust, if there are multiple partners – which can be helpful in unlocking certain constraints that can otherwise frustrate a single party.
The age of collaboration
The pandemic has helped us all to see how important collaboration is to success, and it looks as though this is set to continue across many elements of business. From my own experience, I believe that this approach of involving other entities, supplemented by having a specialist solicitor to help with negotiations and deconstruct legal jargon, is essential.
We are seeing more requests to advise on such projects and, along with joint ventures, this is helping to unlock more difficult sites and get underway with work.
A common collaboration, and one that is likely to increase, is between housing associations and developers. While this can be beneficial in many ways, it’s important that we help manage the expectations of both sides, as the aims of both parties could be quite different. Finding a common purpose, or at least keeping those discussions open is vital to a mutually positive outcome to each party who is investing and thus expecting their own projected set of returns, not necessarily always just financial.
We are also now facing increased pressures on labor and supplies, with shortages and time delays at just about every turn. The system was just about managing prior to Covid-19 but now, the issues have been accelerated, which in turn has boosted costs even further.
Projects that have stalled or delayed are no longer viable due to these factors and continuing the slow progress in many cases. But joint ventures are helping here. Again, from a legal point of view, there are challenges to altering a scheme and bringing in new parties, but this may be a lifeline for many developers who could otherwise risk all the previous work being lost.
Having a third-party consultant(s) can essentially help look out for the best interests of all concerned, and even when issues arise or things stray off course, there is someone there to get you back on track.