“There’s definitely a lack of proportionality that came out of that research and I think that should be something that policy makers take on and say… ask some very serious questions of ‘How do we get this system to be a system which has a much more diverse supply of housing developers and a much more diverse supply of sites that come forward?’ So, at the moment, basically, we don’t have that.”
Susan Freeman
Hi, I’m Susan Freeman, welcome back to our PropertyShe podcast series brought to you by Mishcon de Reya, in association with the London Real Estate Forum, where I get to interview some of the key influencers in the world of real estate and the built environment. Today I am delighted to welcome Nick Cuff. Nick is Chief Commercial Officer at Pocket Living, where he has been a Director since 2013. Pocket Living create affordable pocket homes, exclusively for local, first-time buyers. Nick is responsible for corporate and planning strategy, commercial partnerships, land acquisition and growth. He is a Chartered Surveyor and a Chartered Town Planner. Nick is also a former Cabinet Member of the London Borough of Wandsworth, where he served for twelve years as an elected member and was Chair of the Council’s Planning Committee for four years. Nick led last year’s research, working with Lichfields, examining the potential and the challenges of small site delivery. He writes a regular property blog, offering views on the residential development world, which you can find at propviews.co.uk. And now we are going to hear from Nick Cuff about his career to date in local Government and in housing development.
So, Nick, welcome to the studio, it’s great to have you here today and I just wanted to start off by saying that rather unusually for a property developer, you started your career in politics before you moved into real estate development and maybe you could tell our listeners a little bit about that, you know, what you learnt along the way and what actually prompted you to make the move into development.
Nick Cuff
Well, thank you for having me, Susan, it’s great to be here and to have a chat to you this morning. Yes, you are right, I, I started my career at the inverse to what most people seem to end up doing, which is to have a career and then follow their instincts or the principles into politics and so, in that sense, it’s sort of the wrong way round, I guess. I think, like all political careers though to a certain extent anyway, a lot of it is luck and circumstance and I certainly had a healthy amount of both which led me to ending up both on Wandsworth Council, which is an interesting place particularly from a development perspective, I guess, because of the nature of the Borough and its proximity to central London but also to end up in a Cabinet position which allowed me to play an integral part I think in shaping the direction of the Borough from a built environment perspective anyway and I think that lucky too, I think, because I was a very young man at the time and I got the opportunity to work with some extremely experienced politicians who went on to do interesting other things in some ways. I mean, Ed Lister at the time was Leader of the Council, he asked me to do him a favour which was to write the manifesto which, it wasn’t a favour at all, it was a real poisoned chalice but like a lot of experienced people, he had a lovely way of asking you to do a very difficult job and I obviously I took that on and did that, in conjunction with him and other members and then I was also lucky, he left to become Boris when he was Mayor of London’s Chief of Staff, so he left sort of probably a year into my Cabinet position at Wandsworth and then we were lucky to have Ravi Govindia, who was also an extremely experienced politician, take over the helm and he had been the Cabinet Member Lead for Planning and Development, so he was a bit of an expert in that sort of role anyway and so had a lot of mentoring from him which helped enormously in terms of how I kind of evolved into the role. I think we all do it differently. I did it differently to Ravi and I do it differently to other people who are doing it now but I certainly kind of picked up quite a few skills just from his very long career in that kind of sphere of activity.
Susan Freeman
And there was a lot going on, on the planning front in Wandsworth at the time so, I think you were like 28 when you took over that role and you had Battersea Power Station, Nine Elms, so must have been quite difficult to deal with all that.
Nick Cuff
Yeah, it was interesting because I was actually at CBRE prior to taking that job and the contrast between the two couldn’t have been more apparent because it was 2007/2008 and the role at CBRE very much became one of picking over the bones of failed schemes that had unfortunately – most of them backed by Irish banks interestingly – had unfortunately fallen by the wayside and the banks had sort of reclaimed the asset so, it was all… it was very important, painstaking work but also quite depressing because you weren’t actually seeing anything come to fruition, you were effectively kind of, you know, telling the undertaker what the bill was and so, so that was going on, I didn’t really sort of see that sort of moving anywhere, just because of the nature of the place we were in at the time but at the same time, I had got myself elected to Wandsworth, sort of strange hobby you might say, my spare time was spent doing that rather than sort of, you know, tending the garden or whatever other people do and so it was quite apparent to me that the cycle in Wandsworth was going to be an interesting one, you had the Power Station and it really felt at that stage that something was going to happen there, you know, it had been many years, about thirty years of various failed attempts of being a playground fair to, you know, a hotel, to be all sorts of things but it really felt at that stage that something was going to happen. You had the US Embassy knocking on the door, you had the Northern Line extension which was starting to really gather pace and over my time, when I started on the Council, it had moved from being just an idea to something actually which could work and then the other sort of interesting thing about politics as well, is it is all about timing and you’ve just got a Conservative Government, you had a Conservate Mayor and you had a Conservative Council and you just can’t overemphasise how important having all the tiers aligned on something because when you are talking about major infrastructure and planning major infrastructure like the Northern Line, you are not going to be able to do that as Wandsworth Council, you need your mayoralty on board, you need the Government on board because these things are big cheques and they are very much written for the future in mind so, all of those things had fallen into place so I felt this was a really interesting challenge and opportunity but also one that actually might come to something and so I took it on board.
Susan Freeman
And it certainly did come to something so, I mean, with the advantage of hindsight, what are you most proud of in terms of those planning applications and what less so?
Nick Cuff
Well, so there’s a mix because a lot did happen and I sort of, because I still live in Wandsworth, I sort of go down to the, you know, pick up a pint of milk or go shopping and I sort of see, I see the results and sometimes I sort of squirm and sometimes I think yeah, got that one right. I think, probably, in some ways it helps not having all the knowledge in the world when you start these things because it would… having too much knowledge sometimes makes you much more reflective and potentially quite slow at making decisions and I probably had not enough knowledge but I had enough to make decisions and I made decisions reasonably quickly, I’d like to think, in conjunction with others obviously as the role dictates. I think there’s a few things that I was really and proud about, I mean, Wandsworth town centre and the Ram Brewery has come about and, you know, to go to Wandsworth town centre ten years ago, you would have gone to a very different place, one that was blighted by I would say even urban decay, whereas now it is a bustling town centre, one of the largest town centres actually in the country now in terms of retail and spend, it’s in the top 50 and I don’t think it was anywhere near that at the time. Another interesting one which I sort of regret but I also was proud of, was the Peabody Estate regeneration at Clapham Junction. I had to fight tooth and nail on that one, you know, someone described it to me like walking into Wardour, back in the day, it was an amazing estate, right next to one of the largest interchanges, transport interchanges in the Europe, let alone the country, but it was… and this was an opportunity with an owner of the estate who owned it entirely, to put more affordable housing in to densify it but to densify it in the right way and we had all sorts of iterations, there were some crazy decisions by Peabody at the time, in terms of how they went about the consultation but we got there in the end so, for example, you know, what was not to like about it, I mean it was 50% affordable housing and it was a much nicer scheme proposal than what you had there as I mentioned earlier but they went about consulting and not consulting the Labour councillors who were next door and so we ended up with a committee where the Labour councillors were opposed to the scheme even though it was delivering a surfeit of affordable housing, so it was… and the Labour councillors were very experienced and very clever and well-versed in planning and they came up with some very strong arguments and I only got that one through by an absolute whisker, Susan, in terms of the decision, which is crazy because things, as you know, take such a long time to come to fruition and with these major applications, it can take them many years for them to come back so, getting… threading the needle was so, so important. It got through by about one vote I think but then it got into all sorts of financial difficulties and it’s only now actually into its second phase, so it actually stalled for several years so, all that political energy that went into getting it consented because then it was quite regretful to see the actual delivery of it taking much longer to actually come to pass and even today, as I say, it’s only still half way through its eventual evolution to what it hopefully will be, which will be another nice bit of cityscape in a very urban part of London. So, they were a couple of things, I think, you know, in terms of things that I regret and sort of feel sad about, I probably would say witnessing, in a municipal sense, the sort of erosion of the Council’s role as a urban, designer, architectural expert in the neighbourhoods it operated in. When I joined the Council and when I was responsible for the planning, we had a really, really good team of individuals, some of whom had been working at Wandsworth for 20 plus years and knew the borough inside out from a street by street, they could talk to you about the builders who had built that street, they could talk about the aspects of the conservation and over my time there and indeed after, as councils became more financially challenged, it would be fair to say, those sort of nice to haves in terms of quality and expertise, they retired but they were not replaced and so it became very much more a binary development control function than it was about, well yes there is that element and it is a very important element but then there’s also this kind of qualitative element about how form and buildings should look and I feel very much that councils across, not just London but the UK have kind of lost that, that feature which was I think very much part of why they were, and still should be, a very important element to the development process.
Susan Freeman
So, would the development of Nine Elms and Battersea Power Station have been different had those skills been there?
Nick Cuff
I think it’s just a really good question and they were there at that time although they were starting to erode. I think that Nine Elms is still, I think, too early to say how that will function as a place and in some ways, it’s been an extremely good example of success because it came out of the teeth of a very deep recession and at the time we were trying to make something work in a environment where you are almost in sort of the world end in terms of funding and financing so, you looked at things in a very different light to what you look at in today’s world so, the fact that we, as a collective of people in public and private, came together and were able to bring the Nine Elms forward, I think is a testament to a great deal of endeavour and talent and the confluence of different expertise working in conjunction with one another. I think though at the same time, like all new urban quarters, there is still I think a jury out about whether it will stand the test of time, that the density levels are extraordinary. The thing that I most regret, is the kind of tenures we’ve got and I think there was a superposition, presumption, from me certainly, at the start that by adding more supply into the system and delivering, we would somehow enable more opportunity locally for Wandsworth and for Londoners. I think we got that to a certain extent but we also saw a huge number of those apartments becoming, essentially, buy-to-let or investment properties which is not something Wandsworth in itself could control but it did, I think, mean that the ties that bind these places perhaps were a little bit less in that kind of new Nine Elms Court context of how does Nine Elms fit into Battersea? How does Battersea fit into Wandsworth as a larger part? So that certainly felt like something we could have perhaps done better at but then, you know, in the context of a very, very acute financial environment, to build major infrastructure, to resuscitate a great one listed building, to entice the US Embassy and a number of other interesting occupiers, including Apple I believe now, to that place, I think, you can be hard on yourself but in some ways we’ve got it right, in other ways we’ll probably look back and think well we could have done things better too in other respects.
Susan Freeman
No, you are absolutely right because one forgets the context, it was a different world in, you know, 2008/2009 coming out of a global recession. So…
Nick Cuff
Can I just jump in and say another kind of inside thought on it because I do reflect on it quite a bit in terms of other urban quarters and ideas that are coming forward and there are a couple of other examples at the moment, you’ve got the Old Kent Road and you’ve got the Old Oak area, both of them are not dissimilar to the Nine Elms and I think sometimes we can set the bar too high on these things and you look at the Old Kent Road and you say well, yes there’s a lot of planning permissions there but is the place being threaded together? I think there’s a jury still out on that but my other concern is, you’ve got a lot of planning permissions but you haven’t actually got many implementations and sometimes I think we ask too much of, of ourselves in terms of what we expect and what we actually achieve and pla… we always mustn’t forget with planning, it is a theoretical exercise until someone builds it and I think often, particularly politicians, miss that. You’ve got to find a way of getting planning permissions that are not just fine examples of new urban dwellings and buildings but also are economically viable and my sort of observational with Old Kent Road at the moment is it’s not quite happened, it’s been going now for a number of years and perhaps it shouldn’t take all the lessons and the examples of the Nine Elms as its template but there’s a lesson to be learned from the Nine Elms on one hand and where Old Kent Road is on another and how perhaps Old Oak Common as a place will emerge taking those two as the sort of the bookends and saying well, how can we make a place which is going to succeed, not just in terms of architecture, not just in terms of housing but also in terms of delivery.
Susan Freeman
Yeah, it’s a real challenge isn’t it to sort of create vitality and you know it can look great on the design but it’s the people that make it happen. So, moving forward, how did you get involved with Essential in 2011? So, I mean at that point Essential were one of the first pioneers in the build to rent development sector. What made you make the move?
Nick Cuff
I think I felt at that stage in terms of Wandsworth that I had, I had achieved and learned a lot, a lot of interesting experiences but I had this frustration about not being more at the coalface and I felt that whilst, I had to go back to that point about planning permission is one thing and it’s about also, you know, delivery being another completely separate thing and my sense, my instinct was that I wanted to return to the property development world, I’d been at CBRE, had come out of CBRE to take the role and it was, I felt it was sort of time to sort of start the sort of return back into the development world and it just happened to be, I mean again it’s just luck that Essential was also gearing up at the time to be the first largescale build to rent developer, there had been obviously a lot of talk as you well know, Susan, for many years about why doesn’t the UK have an institutional development sector doing build to rent, you know, why is to so home ownership, why it is the problem, why is that a barrier and what Essential was trying to do was try and cross the bridge and it is a bridge, you know, because we know a very large institutional market for all sorts of residential real estate assets out there but many of them don’t want to take the initial journey from raw land to an asset and willing to buy the asset once it’s built but they’re not as adventurous about, you know, and it’s a bit like that, what’s it, Indiana Jones and the Temple of Doom, the film, you know that rickety bridge at the end where there’s lot of, you know, gaps and, you know, it’s a couple of bits of rope tied together and everyone falls down into the canyon and that is a little bit like the planning process in the UK and what the Essential model was trying to do was say okay, we’ve got the relationship with the institution, they’ve got the capital, let’s be a bit more adventurous and build from the ground up, purpose built rather than buying built stock, actually let’s design this for rent, let’s go through the whole planning process, take the risk because we think by doing that, you actually end up with a far better, superior offer than what you’ve actually got in the UK at the moment, which is largely, at that time anyway, inferior to what the country and certainly parts of the population, needed and that was very enticing and intoxicating because it was potentially doing something very new, very innovative and also something very meaningful because it did need to happen and it was about time everybody else through a lot of talking that someone did take the plunge.
Susan Freeman
And then, I mean, the talking continued for quite a while before units started to come out of the ground, I mean, are you surprised it took as long as it did to really take off as a sector?
Nick Cuff
No, I don’t think so looking back now. I think though there were a couple of moments that really have helped to enable the sector to sort of gather pace. I think obviously examples like Essential being pioneers does help because people learn from those and sometimes being the first mover is a disadvantage in property development quite often but I think probably Essential would say that they got some things right, they got other things not so well, done so, they certainly took some of the pain out or the experience for others. I think though by doing that first moving thing, it did get London to wake up and that always takes time with innovations but what did happen, I think, credit to someone like James Murray for this really, is that he put in place London plan policies which enabled build to rent to become a more understandable proposition in the planning process and whilst, you know, you could argue round the sides about what could be done better and there probably are things that could be done better, I think London now as a city and as a planning framework, does have some very clear routes for build to rent which has enabled more of the market to come in and take risk on the as of planning proposition than maybe 8-9 years ago, 10 years ago when I was at Essential so, I think you’ve got have a first mover advantage, that will take a few years to come to fruition and then generally and it’s similar with Pocket actually in some respects, and then policy catches up and then when the policies have caught up and they’re kind of right, then more come in and then it’s when you build momentum but this is, you know, 10/15 years and unfortunately with a plan that environment that is always going to be inevitable.
Susan Freeman
I still find it surprising after all this time that the housing ministers who come to the Property Week resi conference, certainly over the last two years, have totally ignored build to rent, so much so that the MC has sort of said ‘Oh what about build to rent?’ and it’s quite clear from their answers that they don’t really know what build to rent is, so it would be quite nice, you know, to see it, you know, gaining some sort of recognition.
Nick Cuff
Yeah, and I think that’s still some way away and I think, like all innovation, it’s got to be done multiple times in development terms and it’s got to be done across a reasonable coverage of the country for it to be relevant. I guess that is part of it, the other part of it, I think particularly with the current incumbents in Westminster, is their voter base doesn’t tend to be urban city, it tends to be rural or district and so the engagement that they have with this kind of product and offer, which is very much urban centre or off-centre, is much more limited and so, in their eyes, is of less importance and so that does hinder the sector to a certain extent but does it hinder it enough to stop it from happening and evolving? It doesn’t seem to because it is, it’s going through a roaring period at the moment and, you know, from all accounts, certainly in London but also in many of the other cities, it is a very, I think, exciting pipeline of build to rent developments that will be delivered in the next 5-6 years and at that stage I think the ministers will not be able to ignore it any further.
Susan Freeman
So, what persuaded you to leave Essential in 2014 and join Pocket Living which was another start up?
Nick Cuff
So, I was attracted to Pocket because in my time at Wandsworth in particular, I had seen how, going back to the point earlier that there had been an enormous amount of development but a lot of it hadn’t really been able to make a difference to young Londoners, it had sort of passed young Londoners by and I really did feel that there was not enough home ownership options for people who wanted to live in the city, particularly my age group and age groups below me, my generation, very much affected by the lack of supply but also not really just the supply issue, the kind of tenure and affordability, I think as I said earlier, it’s not as simple as build more homes, you are going to get more people on the housing ladder, it really isn’t, it’s also making sure you have the right kind of homes and how you do that is, there are ways of doing it, various different ways and what Pocket does, it through very clever design, is to take small difficult sites which might not achieve that much in terms of affordable housing and take them and deliver in many cases a 100% intermediate affordable housing but to also restrict those homes to people who live or work in the local area and I just felt at the time that there was something there that was really important. Mark, the CEO, he’s more a politician than a property exec in some ways, a lot of passion, a lot of emotion and I think to actually make the case to do what we were trying to do out of Pocket, you need that kind of individual and that kind of approach and I suppose the final thing, you know, about the planning system I’d learned, is you can’t, there’s that old saying, you can’t push string but you can pull it, and one of the things I had appreciated about the planning system is it can be very didactic and very difficult but if you make a good case and you cut through with a good case, you can pull it towards you and you can pull the momentum towards you and I really felt that at that point that there was nothing out there which was really delivering meaningful home ownership to young people and this was a really smart way of doing just that and it had real legs, I mean the demographics speak for themselves and so, I just felt I had to give it a go and so I took the job and left Essential and joined Mark in 2013, just as they were getting funding by the Mayor of London to role out a more meaningful programme of Pocket homes.
Susan Freeman
So, for our listeners, can you explain how the Pocket model is different because, as I understand it, you are able to sell to first time buyers for at least 20% less than the market value. How do you do that?
Nick Cuff
So, Pocket home is a 38 square metre home, it’s smaller than a standard one bed, it’s space standard compliant but it’s designed to an inch of its life. So, what we try and do in a building, rather than do a mixed tenure scheme is, we try and do a mono tenure of compact, one bedroom homes and by doing the mono tenure and therefore having more homes on a footprint, we are able to create a cross subsidy to create a discount on the price of those homes to sell into the market. So, it’s very much dancing on a viability pinhead and it doesn’t work in lots of locations but if you can find a sensible rectangular site, because we don’t change the design of our homes, they are what they are, if you can find a sensible rectangular site, we can be very efficient and through that efficiency, we create this discount to the homes to sell on and it’s not just the discount, it’s also an income restriction and it’s also a restriction on what you can do with the home, so you can’t rent them out as an investor, you have to live in the home and then in the resales, those restrictions apply still so, it really stays in that first time buyer, I suppose, gene pool for want of a better description, and so it stays affordable to Londoners for ever and ever, which I think is one of the attractions so, it’s affordable housing, no it’s not deeply discounted rental housing, there’s a role for that too obviously, a very important role, but this plays a different role in the London economy and in all cities and economies I think, which is those people on modest salaries, but good salaries, we’re not talking you know low salaries by any stretch, the people who buy Pocket homes, but people who would be earning, you know, say £30-50,000, those individuals are probably doing jobs which are very important to London but they simply don’t have a chance to buy a home on the open market and what Pocket does, it fulfils that role for them.
Susan Freeman
And I’ve actually been round one of your developments, actually with Mark because I was a little, you know, sceptical, I thought well this is, you know, it’s going to feel very small but it doesn’t, it actually was very light and airy and just, as you say, so well designed but it seems like such an important part of the market, I just wonder why there don’t seem to be other developers doing what you’re doing, building homes for first time buyers and actually keeping them in that market on resale?
Nick Cuff
Well, I think it’s a little bit like the Essential living example, to a certain extent, which is that you have to be a first mover and then policy catches up and whilst I think it’s slightly different in the example of Pocket, I think the example is still pertinent because we are now seeing the Government turning around and saying actually we want discount market sale, which his what Pocket is, you own 100% of the home but you have a discount. The Government is now saying, look this is important and in their national planning documents, they are now putting in policies to encourage and enable more of this and we actually are starting to see other developers do this as well so, I don’t think we are going to ever see Pocket type platforms like we are, who just do this stuff, as much as we do and that’s a shame but I do think we will see a greater emphasis on these kind of homes as the policy environment starts to catch up so, I think things are changing but they are, as always with development and real estate, they are changing very, very slowly.
Susan Freeman
Yes, that’s true isn’t it. So, just in terms of scale, how many Pocket homes have you built and how many have you got in the pipeline?
Nick Cuff
Good question. We are on our, we’re just about to complete on our thousandth home which is going to be in Croydon and we have about 1800 more in planning or construction at any given period at the moment so, that is us running pretty hot, I have to say, and a lot of my day now is spent spinning plates and dealing with challenges and it’s that sort of, you know, SME to sign of as an S, very much the small side, to then graduate to M and then graduating beyond that and we’re very much in the sort of graduating to the M bit of the SME at the moment, Susan, and I have a lot of, you know, a lot of people kick housebuilders a lot of the time and, you know particularly politicians, but I am very envious of housebuilders and how they seem to have programatise and they seem to have a way of doing things because we’re not quite at that stage yet, we’ve got a sort of set set of processes for how we grow the company but it’s a lot of fun doing it but it’s a lot of work too.
Susan Freeman
And you mention that you’ve got Mayoral funding, I mean is there any Government support, bearing in mind it’s such an important part of the market?
Nick Cuff
Yes, so the Mayoral loan is probably the… it’s so interesting because I think you know when we talk about SMEs, one of the biggest challenges is just equity to get into these types of development and Pocket had been around before the Mayor of London loaned it out of its Innovation Fund, £20/21 million, but what Pocket couldn’t do was really scale or in any meaningful sense anyway because you just don’t have the capital to deploy on more than one or two things at any one time. What the Mayoral funding allowed Pocket to do was to say, look, you know this is a proposition which works, it’s very meaningful as you say, we want you to do more of it and the Mayoral funding allowed us to sort of say times by three what we were up to so we got from, you know, two/three sites every four years to six/eight sites every three years and it went like that so, that’s been an absolute foundation rock for the business and even without it, I think we would struggle very much to sustain the sort of scale that we’ve achieved and delivered for Londoners. We also are lucky in that Homes England do put some of the bet funding into the projects too. Without that, again, because we’re delivering very much 100% affordable housing, it is less profitable than normal housebuilder typologies, much less profitable to be honest, that without those kind of bases of support, we would really struggle to get to where we want to, to get to and continue to get to, so we do have some support, it is probably enough for what we do, I think there’s lessons as well and one of the things that I hope will one day be picked up and learn, is the incredible innovation on that funding, is one that should be a good lesson for others to follow and that Government should be very open to public/private partnership developers bringing private capital in isn’t always possible as we discuss with BTR, you know private capital wasn’t prepared to come in that early stage across the bridge as we discussed and I think that the Pocket model with GLA, with Homes England, is a great template but other innovators to work with Government, to bring kind of new homes into the system.
Susan Freeman
And of course you have Related now who are one of America’s largest developers of affordable housing and they, I think, took a 50% investment in Pocket in 2016 so, what has their role been and has that enabled you to sort of push out in different directions?
Nick Cuff
I think the Related experience was a really important moment for Pocket because it said, it said that we’d arrived. We’d got to a stage in the programme with GLA, Homes England, or with GLA at that stage, where we just needed more funding because, you know, these things are expensive to build and we were short of private capital so we needed a institution to come in and match fund and put more capital into the programme to get ourselves to the stage where were meaningful as a business so, Related did that, Related have a heritage in affordable housing in the States, different kind of thing of course, different system, different model, but they very much have that heritage so they get the kind of interplay between public and private and they were really impressed with how the Mayor, how Pocket, how Homes England, were working together, was an impressive example of municipal intervention and they see that very much in the cities in the States where the mayoralties, there’s much obviously more mayoralties, mayoralties have more power and mayoralty intervention is a very important catalyst for urban regeneration. In this country, mayoralties are still a relatively new thing and the London Mayor is just sort of the more mature model and one thing the London Mayor does have is a bit of power over housing and delivery and so that kind of allowed the investment to be forthcoming and it allowed us to sort of scale a bit more. What it’s also done is that the related expertise is very much an institution of build to rent as well and has pushed us into to a bit more build to rent and the third thing it has allowed us to do is to work much more closely with Argent and Argent Related at the same time as the Pocket investment took place, Argent and Related became a JV partnership so sort of a merger of, if you will, so a different kind of model but then it’s an interesting one because then what we’ve got now as a group, in terms of Argent taking much more longer term master planning approaches, Pocket being much more pacy and much smaller and Related sort of knitting the two together in some respects and we can be valuable to, we can add value and skills in some ways and Argent can bring value and skills in many other ways and they’re a great business so, we are very much part of this group mentality now which has enabled us to sort of, I suppose, it’s like the dragonfly has a thousand lenses and the more lenses you have, the more you can see, and the Argent and the Related aspects are just good as those extra lenses to sort of see the world and how it changes and the risks that always 38.25 with property development.
Susan Freeman
So, you mention build to rent which is interesting and I think you also are moving beyond the original Pocket home model to sort of build out to other residential that isn’t necessarily for first time buyers. I mean, do you see that part of the business growing?
Nick Cuff
Personally, yes I do and we’ve got our first scheme in construction at King’s Cross which will be Pocket discount rent product, Pocket branded at discounts to market which I am very hopeful will help people to build deposits to buy homes, maybe not with Pocket but they can start the journey at a rung a bit lower than what we are at the moment so, I see it very much as a sort of, as a journey and whilst our ethos very much is in the starter in the market, it’s a journey which I think needs to be more reflective of other parts of the housing market, not least because it enables us to do more and serve more, there is only a certain level of scale I think I found we can get to by just doing small sites and Pocket for sale discounts, you can do lots of things and lots of great things with that but to take us to a more evolved state, we need to be able to play in different parts of the market.
Susan Freeman
So, you’ve mentioned planning a few times during the conversation and I know you commissioned some research last year with Lichfields, really looking at SME, developers and one of the things that actually caught my eye, that the average period for a determination of planning on small sites, is over a year, I think it was about 60 weeks and I mean, how smaller, medium sized developers going to really get back into the game if they’ve got planning stacked against them and also, at the moment, we have a shortage of construction materials, we know there’s a dearth of experienced construction workers, I mean, all that just does seem to be stacked against small developers.
Nick Cuff
Yeah, I think that’s right and it… one of the reasons we did the research was the frustration that I had, and others did have as well, about the limited to no analytics in the property development world about the journey that developers go along and you look at other sectors and industries and data analytics is now so important and to a certain extent the real estate industry gets that but the planning side of it is still very far behind and we have policies that are being created by local government but also more principally by central Government, which really are based on ideological positions and sentiments which may or may not be evidence based and there is this… I mean I kind of wrote a blog on this about three or four weeks ago, there is no bedrock data about how things are being determined in the UK planning system, really, there’s macro tables but there’s literally nothing else and it’s very, very interesting to me that if you go back 20-25 years a much more meaningful proportion of the housing supply in this country, was being delivered by SME developers and builders and yet with the onset of the plan led system in the 1990’s and all the layers of planning that have been built over the last 20 years, we are now down around 12% and then the other being well, how does Pocket, why is Pocket an example of an SME that has kind of made it and, you know, it’s had its ride and its rapids but we are an established business, so why aren’t there more, you know, to your point, why aren’t there more Pocket type businesses out there and so I wanted to do this piece of research. Now, we are very lucky, or we were very lucky, in London that the London Mayor does collect the data on small sites from London, doesn’t really do anything with it but the data was there so we were able to actually do a deep dive into that data to sort of work out what was going on, now it’s only London that has this information, there’s no other part of the country that collects data on small sites so you’d have to essentially go into the entire planning authority’s logbook to find small sites and that would take countless hours to do so we only had the London stuff anyway, so it was only useful as far as, is London reflective of the country, perhaps yes, perhaps not, you can debate that, but wouldn’t it be amazing if you could, for a start, compare different cities and performance and wouldn’t that engender some sort of difference of delivery and incentivise with carrots and sticks, you know, mayors would start to compete with one another in different ways and start to actually genuinely reflect on what planning authorities are achieving and succeeding on and what they are not and how they can actually improve them in bringing the management and resource and capabilities to do that. I mean, just that, that sort of stuff is very much what the States do but we just do not seem to be able to do and it really is about going back to first principles and asking where’s the evidence and this research, you know the other thing I sort of will say, is that over the pandemic, this research database has been lost and I wanted to recreate it this year and do another round of it to see how the world had moved on from last year and I couldn’t do that because the data doesn’t… no longer exists so we’ve actually gone back but the actual thing itself was very fascinating, you mention the 60 weeks but what we found was, we looked at the journeys of small sites in the system and we found time was a killer, we found a quarter of them, and this is a random sample, a quarter of them were on their third attempt in planning, so they were taking 60 weeks to get planning but a quarter of them had been going two or three times so, you know, 60 times 3 perhaps, you know, you just don’t know. Fascinating on, you know, we talk a lot about lately about design and urban design, three-quarters of them, the primary issue was affordable housing and tenure, even though they were small sites, that was the main issue. Design and architecture was way down the hierarchy as a consideration. The time being spent on these was all about why is not delivering one more affordable home or two more affordable homes than the 10 or 12 weeks delivering at the moment and you just feel like, as a system, the resource and the energy is being spent on the wrong things and the bigger picture is sort of kind of being lost, we want to, particularly with small sites, want to probably deliver beautification, infilling of areas of scrap land and yes we want to achieve affordable housing too and that’s important but we need to make sure there’s a balance and that we can’t expect small sites to have all the same regalia and treatment as large sites where patently the resources aren’t there in the same extent to enable to deal with all these sort of requirements so, there’s definitely a lack of proportionality that came out of that research and I think that should be something that policy makers take on and say ask some very serious questions of how do we get this system to be a system which has a much more diverse supply of housing developers and a much more diverse supply of sites that come forward, because at the moment, patently we don’t have that.
Susan Freeman
I have to say, I am almost lost for words hearing that we’ve gone backwards on the data, that we had the data and it’s now not available because, you know, everybody is now focussing on the importance of data, you know, whatever transactions you are involved in, in real estate so, I think the sooner we start, I mean the technology is there to collect it, we do need to get on with that and I mean, the Government’s focus still seems to be so much on the larger housebuilders as being the way out of the housing crisis and I just wondered what you thought about these Government proposals to use it or lose it in terms of planning permissions to force developers to use the land they have planning permissions for, I mean, do you see that as a problem?
Nick Cuff
I don’t really, I mean I think the Letwin Review or a thorough review felt that in the area of land banking, it was actually more of a political concern that one, again, which was what evidence and data would indicate is a problem and so it’s another example of a lack of data and a sentiment led response. I mean, look, I mean we can all find ways of brining more carrots and sticks into do more implementation, I don’t think that is a, in itself, an unusual thing to try and achieve but I think we need to look at the thing in first principles and in the round and say is that really the main issue here, isn’t the main issue here the fact that we just can’t find enough land to deliver enough homes on? And then, yes, there are things perhaps we could tweak around the edges but it does feel like a smaller element of what is a much larger conundrum and that the conundrum isn’t really being grappled as much as it could be because the evidence bases aren’t being effectively interrogated in the way they should be to come to better policy.
Susan Freeman
So, say you were Housing Minister, what would you be doing to try and get more homes built for people to live in?
Nick Cuff
I think, I think I would have a data unit in an ACLG, I mean, I think we need to come much better at collecting information around cities and institutions and how they perform. So that would be my number one, my number one initial reform because if you do that quickly then you can build the evidence to actually justify policy. I think you need to see a system which is much less obsessed with tenure and much more focussed on delivering good quality housing. The current system is like, I use the analogy of satellites, you know, we all know that the world is covered in satellites now and rather than removing satellites from the sky, we just put new ones in and it becomes very cluttered. The current planning system is a very cluttered system, the planning atmosphere is full of old policies that haven’t been extinguished and the agendas and reforms which were half-baked and never quite made it into the real world and of course, the more you add, the more developers have to consider and to reflet with their adviser and etcetera and so it becomes, you know, it becomes much more complex and more litigious because you’ve got to have reference to a lot more things so, I think, going back to first principles, if I was Housing Minister, I would start to ask some very basic questions, with some proper data, about what do we want the planning system to achieve because if it is more homes and perhaps more affordable homes, then there are ways of achieving that but if it’s to deliver more environmentally sensitive homes or more or less dense homes then that’s something different and at the moment, the system is a, unfortunately, undermined by it being an amalgamation of probably a dozen different, and sometimes competing and opposed objectives and there needs to be a bit more hierarchy around that because without that hierarchy, you end up just being in a bit of a pickle which is where we’ve ended up in as a country.
Susan Freeman
Yeah, I think one of the problems is politics always seems to be short term, whereas a lot of these problems and projects are very much long term and have you thought about maybe sort of further on down the line, going back into politics?
Nick Cuff
I think I’ve had my political career, I did twelve years and that was enough.
Susan Freeman
Okay, well that, that’s a shame. So, okay, so we’re coming to the end of our time, Nick, and I was going to ask you, you know, what you’re most looking forward to as we, you know, gradually come out of this Covid period but I think you have, you have a baby due sort of shortly so, I assume that that’s what you’re most looking forward to?
Nick Cuff
I am, yes, she’s going to be due in October so, it does unfortunately mean, Susan, I won’t be at party conferences this year, I’ve let Mark, I’ve let Mark know. Mark did ask me whether I’d be joining him, even after I told him the due date, and I said I probably won’t be able to make it up to Manchester or Birmingham or wherever it will be so, I will be very much not present but I do wish you all the best for the conference circuit because I know you’re going on it.
Susan Freeman
Yeah. Well, Nick, thank you, thank you very much and I wish you all the best with the new baby…
Nick Cuff
Thank you very much.
Susan Freeman
That’s really exciting and thank you much for your time today.
Nick Cuff
It’s been great talking to you, Susan.
Susan Freeman
Thank you, Nick for sharing some fascinating learnings and insight from being on both sides of the table, as a local authority councillor and as a residential property developer.
So, that’s it for now. I hope you enjoyed today’s conversation. Please join us for the next PropertyShe podcast interview coming very soon.
The Propertyshe podcast is brought to you by Mishcon de Reya in association with the London Real Estate Forum and can be found at Mishcon.com/PropertyShe along with all our interviews and programme notes. The podcasts are also available to subscribe to on your Apple podcast app, and on Spotify and whatever podcast app you use. Do continue to subscribe and let us have your feedback and, most importantly, suggestions for future guests and of course you can continue to follow me on Twitter @Propertyshe and on LinkedIn for a very regular commentary on all things real estate, Prop Tech and the built environment.