14 Jan 2014
Nigel tells Radio 4 how we’re working towards a better housing market We’ve already pumped about a billion pounds into student accommodation and now want to build retirement homes. But what effect is this likely to have on the housing market?
Nigel Wilson, our chief executive tells the Today Programme what prompted our move into investing in house building: “The Treasury did an outstanding job in changing regulation that was forward looking and allows us to invest in infrastructure.
“We started with student accommodation because that in many ways was the easiest for us to get into. We’ve invested so far about a billion pounds in student accommodation but we want to apply those similar financial techniques to other sectors of the housing market including affordable housing. Including long-term care ... including urban villages for retired people.”
Affordable housing for the ‘last time buyer’ market Affordable housing isn’t only important for the first time buyer. What about the ‘the last time buyer market’?
Nigel explains, “Last time buyers are the retired people in the UK - there’s about four and a half million people want to move into more affordable homes for retirement. They’ve got a large amount of housing equity - over a trillion pounds for them to get access to income from. But they’re not getting access to this income because they have to compete with the first time buyer.
“We should build purpose built housing for retired people where they can enjoy a very enjoyable life style plus having an income from the previous house that they owned.
It would free so many houses. We have 20 million unoccupied bedrooms in the UK. A lot of those bedrooms are owned by all the people who want to move to a smaller more economical house.”
Nigel says that as we’re creating a new supply of affordable housing we’re not helping fuel a bubble: “One of the great British problems over the last 20 or 30 years an absence of supply and excessive house prices inflation, which has made it unaffordable to large parts of our communities.
“We don't want house price inflation. We want steady growth in house prices.
“That just fuels house price inflation. It’s not the right solution to the problem that we have. We have to massively increase supply.
“We’d like to see lots of young people get on the housing market. We’d like it to be more affordable. And we'd like a lot more innovation in finance and a lot more innovation from local authorities in freeing up the loads of land we have available to build houses. Over the last 20 odd years we've increased the greenbelt from 1.5 million acres to four and a half million acres. If you freed up one percent of the greenbelt, that’s enough to build 350,000 new houses.
Looking to the year ahead Nigel says he sees “a continuation of the boom”.
He goes on to say: “I think the introduction of, not just ourselves, but many of our fellow insurance companies and pension funds is the right approach to financing in the housing market. Too much of it is very short-term financing looking for very high return.”