A shiny new house, a 10-year warranty and, if your lucky, the chance to spec your own fittings – no wonder people like buying a new home. DCLG figures show that housebuilding numbers are recovering, with 137,010 new housing starts last year, up 10 per cent on 2013 and 59 per cent on the trough in 2009. This increase in activity mirrors a steady rise in the number of planning permissions granted in recent quarters.
The HBF and Glenigan’s latest Housing Pipeline report shows that permissions for 52,167 homes were granted in England during the first quarter of 2015, 19 per cent up on the 43,926 consents in the same quarter last year. As a result the Moving Annual Total has passed the 200,000 mark for the first time since early 2008.
However, developers are still only building around half the number of new homes the country needs. Stewart Baseley, Executive Chairman of the HBF, said, “One of the biggest constraints on the industry’s ability to meet the new level of demand and deliver further sustained increases in build rates is the planning process. How quickly we get more sites to the point where we can actually start to lay bricks will be a major influence on future house building levels.”
The Government’s new homes target is a great step forward although it’s still 50,000 fewer each year than what is needed to keep pace with demand. Brian Berry, FMB
Boosting housing supply
The Government has announced plans to deliver 1 million new build homes in England by 2020. Brian Berry, Chief Executive of the FMB, said, “The Government’s target is a great step forward, although it’s still 50,000 fewer each year than what is required to keep pace with demand, is a realistic increase on what is currently being delivered.”
Increasing housing delivery will also provide estate agents with much needed property instructions. “We’ve been banging the drum about the dwindling supply of housing for a while,” said the NAEA’s Mark Hayward. “There simply aren’t enough houses to match demand and we’re reaching crisis point.”
A major issue that estate agents have, however, is that many developers choose not to engage with agents and employ and train their own sales staff to handle sales. Helen Jones, Director of Marketing at Larkfleet Homes, said that when her firm use agents they almost always work with local firms rather than the national chains, as they want “local knowledge and the type of relationship” which it is “difficult to get with national chains”, but she added that sales negotiations are nearly always “handled by our site sales staff.”
“With the best will in the world, an agent is never going to be as well briefed on a development as our own members of staff who are permanently on site. They know the properties intimately, the area, the specific questions potential buyers will ask, and the answers! They interface with construction and other parts of the company. These are all difficult things for an agent which is handling many properties in many locations to do.”
Win more instructions
The previous Head of New Homes at The Romans Group, Kevin Ellis, who is now Land & New Homes Consultant at Thomas Mae, is not surprised to find that many developers find it “more efficient to employ their own staff”, as many housebuilders have “a clear strategy for the customer journey” and this will invariably have been extensively trained into their own staff.
However, Kevin believes there is more that agents could do to win new homes instructions, but that involves having a strong local presence and demonstrating a strong awareness of market research to identify areas where a developer can create more value. “Most agents get this wrong, because they are too blinkered on what prices are being achieved in the second hand market and therefore underestimate the specification and detail that most house builders go to,” Ellis explained. “The best way for an agent to win more instructions is to have a clear offering for house builders, which includes land acquisition through to a strong offering on new homes sales and menu of services for house builders.”
Get involved – early
In many instances the best opportunity for an agent to get involved in marketing a new development is from providing advice and research to house builders at the stage they are either appraising a site subject to planning or once they have planning, according to Ellis. “Depending on the quality of the advice provided, i.e., ways to push value, advice on optimum sized houses that will achieve the best return and also the target audience, it can be possible for an agent to secure an instruction at a very early stage,” he added “The advantage to the house builder is that they gain the commitment from the agent and by being involved early on the marketing strategies evolve in a more partnership like way.”
Among those agents actively helping developers from planning consent and plans to specification and amenities through to prices and sales strategy and anywhere in between, is Glentree Estates, based in north London. This strategy has proved highly successful and as a result the firm is currently working with a number of major developers, including Octagon, Affinity Sutton, Albany Homes, City & Westminster, City & County, CG Towers, Vision Residences and Fitzroy.
“We are lucky to work with some of the UK’s leading residential developers some of whom look for more help than others,” said Lauren Abrahmsohn of Glentree’s New Homes Division. “Together we make sure that schemes are carefully groomed for the right market either locally or internationally. We are highly in tune with our local market and what the buyers need at any one time,” she added.
Another firm actively seeking to work with m0re developers is JOHNS&CO, a specialist agent for the premium new homes set up last year by John Morley, who last year left his position as Head of International Sales at Ballymore, to capitalise on what he viewed as an “opening in the market to provide an increased level of service.”
John said, “Before we started JOHNS&CO there was only a basic level of service being offered that didn’t match the quality of the apartments on offer from these luxury developers. I left Ballymore with the company’s blessing to start JOHNS&CO and I wanted to keep the strong business and client relationships going in my new venture, creating huge added value to Ballymore in the meantime,” he added. “Following the company’s success, we are now talking to other developers who like the model and have seen how it works. They have been intrigued and are looking for a similar relationship.”
Effective working relationships
Developing a strong relationship with an agent is absolutely essential for developers, according to David Smith, Head of Group Marketing and PR at Octagon.
Smith commented, “Some years ago, when the market was weaker, we instructed Barton Wyatt to help to sell one of our flagship schemes, Virginia Park in Virginia Water, which remains one of our most successful developments to date – this really set the tone for the future.
“The company provide a friendly, personal service, have unrivaled local market knowledge, and, when combined with the efforts of their impressive marketing team, this agency has proven they can compete with the larger firms when it comes to delivering results.”
David Wilson Homes Southampton works closely with Henry Adams in Hampshire across multiple developments. Ian Wallace, Managing Director of Barratt Homes and David Wilson Homes Southampton, said, “They have detailed knowledge of the local area which is good and they have existing relationships with local people who may have used them before. This is especially beneficial with the number of renters looking to move onto the housing ladder.
“Agents also have strong community links with publications and groups that we may not know about and the partnership approach and pooling information really helps both parties.”
In Greenwich, south-east London, Cushman & Wakefield has just sold the last unit at Kitewood’s scheme, The Peltons. “We selected Cushman & Wakefield because they introduced the site to us and also as we have worked with them for many years and have an excellent relationship,” said Susan Nicklen, Sales and Marketing Manager at Kitewood. “We had every confidence that they would perform and they have done so.”
Meanwhile down at the Woodacres development in Hailsham, East Sussex, which Kitewood has just launched, the developer has appointed Fox & Sons despite the fact that they have not worked with the agent previously.
So why did Fox & Sons win the instruction? “They spent a considerable amount of time providing marketing advice to us and have the benefit of wide coverage through their many offices,” Nicklen explained.
“In terms of timing, we usually involve the agents at an early stage in order to benefit from their expertise throughout the development period,” she added.
Meeting developer needs
Regardless of whether or not your firm has a dedicated Land & New Homes division, it is crucial that at the very least your company has an individual who specialises in new homes and can be called upon to share their knowledge and help house builders.
Ultimately, only by having a dedicated individual or department that specialises in new homes with a very clear understanding of the needs of local developers can an agency justly expect to create new customer relationships with house builders, enabling it to expand, increase instructions and maximise revenue streams from this lucrative area of the housing market.
Federation of Master Builders www.fmb.org.uk
Home Builders Federation www.hbf.co.uk
National Association of Estate Agents www.NAEA.co.uk
Larkfleet Homes www.larkfleethomes.co.uk
Thomas Mae www.thomasmae.co.uk
Glentree Estates www.glentree.co.uk
David Wilson Homes www.dwh.co.uk