We need to be honest about what property can and can’t do

You’re more likely to hear a property developer make an on-stage commitment to tree planting, playgrounds or cooking clubs, than discuss yields and asset classes these days. But audiences are wary of their intentions, and with good reason.

Choose a benchmark, any benchmark, and England is sliding backwards. Newly released figures have shown worsening life expectancy, health, inequality, deprivation, child poverty, housing affordability, homelessness… suggesting the social contract in the UK is well and truly broken.

When a leading developer spoke about how they are making a difference last week, one spectator raised their hand and said: “Can we talk about how we all need to pay more tax instead?”

Whether for PR, CSR, or because you have actually drunk the Kool-Aid, it is time to stop pretending that housebuilding can fix the housing crisis, allotments will aid a mental health epidemic, and construction can ‘solve’ climate change.

If this industry is going to revive its dire reputation, we need to be honest about what property can and can’t do.

I’m not saying place interventions can’t be powerful and transformative. Social impact is not alchemy, we know how it’s done – the problem is that we’re not doing it.

This government’s response to crises, from flooding to child poverty, is the tacit equivalent of ‘let them eat cake’

Social impact isn’t new. In 2010, Sheffield Hallam University published a concluding study of the New Deal for Communities (NDC) programme, which shows how the NDC, launched in 1998, transformed 39 deprived neighbourhoods in England, with each scheme funded by £50m. A series of five reports measure its impact across 36 core indicators, including recorded crime, GCSE results, improved health and a feeling of belonging.

The NDC showed that investing in place often resulted in the most broadly felt positive outcomes, with improvements impacting social rent tenants, women, lone parents, BAME residents, the workless and the disadvantaged the most.

But the NDC expenditure was never solely on housing and the physical environment; this accounted for 32% of the cash, with 10% spent on crime reduction, 11% on health, 12% on worklessness, 17% on education and 18% on community infrastructure. In other words, they didn’t just build some housing with a playground and sit back, expecting people’s lives to improve.

What the NDC shows is that investing in housing and public space can transform a neighbourhood – but not unilaterally and not alone. The kind of broad-spectrum investment and community involvement needed to ‘level-up’ places simply isn’t happening, hasn’t happened for a long time, and looks unlikely to happen. There’s no sense in pretending otherwise.

Property leaders should demand action from government on policies that undermine the life chances of their neighbours, lovers and children

In contrast to what we hear on the panel discussion circuit, overall developer contributions towards open space fell by £100m between 2006 and 2017, according to Community Infrastructure Levy (CIL) contribution tracking by the Ministry of Housing, Communities and Local Government.

The public sector has not done better: funding for libraries, parks and public spaces has declined by 40%, according to the Institute for Fiscal Studies. Councils sold off £9.1bn of their public assets in less than four years – between 2014 and July 2018 – which included civic infrastructure of all kinds.

Add swingeing cuts to policing, healthcare and benefits and what are the chances of actually improving places, even if you are a developer who gives a damn, when government policy undermines any initiative? Crime alone has seen a 12% increase in reported robbery, a 5% increase in vehicle theft, and a 7% increase in knife crime, now highest on record, according to Office for National Statistics figures from September 2019.

As for the oft blathered claim that property development is critical to solving the housing crisis, there’s considerable evidence that it’s making it worse – again with the government’s help.

The housing problem is not an issue of supply and demand – a convenient fiction used to defeat Nimbys and bully communities. As economist Ann Pettifor wrote in The Guardian, what housing has is “a bitcoin problem”.

Pettifor writes: “Government pretends the real cause of unaffordable housing is a shortage of new builds. It uses this argument to provide cover for further taxpayer-funded subsidies and tax breaks that benefit its property-owning core voters, its close allies in the construction industry and property market and its supporters in the City of London. But the evidence is clear.”

The housing affordability (not shortage) crisis, fuelled by market speculation by foreign buyers, buy-to-let investors and the Bank of Mum and Dad alike, is not fixed by building more houses. Pettifor goes on to call for the tightening of mortgage credit. Government stimulus through Help to Buy and the first-time buyer relief helped Barratt boost its profits in 2019 by 2.9% to £423.1m. The stamp duty tax relief claimed by first-time buyers hit the £1bn mark last quarter.

What housing has is “a bitcoin problem”

As for supply, there are now enough empty homes to hit 72% of the government’s annual new homes target. The number of long-term empty homes has risen for the third consecutive year – the fastest rise since the recession, and double the previous rise. Most empty homes are valued at the very low end or very high.

Interestingly, according to Action on Empty Homes, many areas that see the most new housebuilding also have the most empty homes. Inner London saw an 11% rise in empty homes, with outer London rising by 9%. Two-thirds of England’s local authorities saw their number of empty homes increase. Still, few can afford to buy, driving up the cost of rent.

In addition, there’s the trouble with second-home numbers, which in some areas make up one in every 50 homes. A recent investigation also found that in some parts of Great Britain, one in four homes is listed on Airbnb. As for the much heralded return of council housing, the actual number of social homes fell last year with a net loss of 17,000.

In the financialisation of the housing market, affordable rent is the new frontier. Last week, behemoth investor Blackstone bought iQ Student Accommodation for US$6bn, the biggest private real estate transaction in British history.

There’s concern, too, as for-profit investors move into areas such as social housing, with Blackstone and CBRE Global Investors buying up affordable housing stock: “Will they add value in a sector that desperately needs investment, rather than being there to extract value?” Kate Henderson, chief executive of the National Housing Federation asks in the Financial Times.

Why the do-gooder rhetoric on stage? The growth in ESG investing could be a factor

All this to say that a lot of what we hear is BS. But if business is still booming, why are developers bothering with this do-gooder rhetoric on stage? Along with winning friends, planning, political influence and community support, the growing environmental, social and governance (ESG) investment pie could also be a factor.

Driven by high-net-worth individuals and companies who wish to invest their money ethically, ESG investments are expected to address climate change, be socially beneficial in terms of health, well-being, diversity and inclusion, and have transparent governance structures with a positive organisational culture.

It is predicted that more than 25% of funds will be allocated towards ESG by 2021, according to a survey of global investors by BNP Paribas. ESG has already grown from US$453bn in 2013 to US$760bn in the European and US fund market in 2019.

But the ethics of ESG are not failproof, and it’s important to note that the definitions of E, S and G are not actually regulated. In their report, Greenwashing: Misclassification and Mis-selling of Ethical Investments, SCM Direct found two ‘ethical’ funds that had invested in tobacco, alcohol, gaming and defence stocks, amounting to 11.4% of an L&G fund and 5.6% of a Vanguard fund. The paper calls on the Financial Conduct Authority to regulate the sector.

The growth in ESG should be good for places. But we need to be honest about what can realistically be achieved, especially under a government whose response to crises thus far, from flooding to child poverty, is the tacit equivalent of ‘let them eat cake’.

As for stage presence, property leaders should use their collective voice for more than just self-promotion; instead, demand action from government on policies that undermine not just the social value of your assets, but the life chances of your neighbours, lovers and children.

You must manage, not inflate, community expectations regarding the impact of what you build, and rightly call on government to step in where needed – not purport to fill the breach. Don’t let profits purchase your political silence. It’s your reputation on the line.

Come to the Festival of Place and join the conversation on 7 July

If I have one ambition for our Festival of Place on 7 July, it’s to hold a frank conversation about what is achievable and what we must lobby for, devoid of placewashing. Please help this happen, either on stage or by raising your hand during the Q&As.

We must come together and focus our time, energy and budgets on evidence-based initiatives that we know will support change for the better – to learn, organise and hold policymakers to account.

The market’s dysfunction has created a bubble that may yet be lanced by Coronavirus, if not Brexit. For those engaged in dubious social impact work, as the climate and other emergencies escalate, conversations at the dinner party and planning meeting are bound to become more detailed, and uncomfortable. You will be found out.

And finally, blessed are the placemakers: those still endeavouring, against the odds, to make a difference in areas of deprivation.