02 December 2019

Our Chief Executive features in the EADT on the housing crisis

David McQuade, chief executive of Flagship Group - one of the region's largest housing associations - said the "desperate need" for new affordable homes showed traditional approaches had failed and collaboration was needed.

While new homes targets have been missed for decades, Mr McQuade said social housing shortages were "particularly marked" - with just over 5,000 completed last year nationally; way behind the 90,000 needed.

And with costs of private accommodation growing, Mr McQuade said professionals on £50,000 salaries were bidding for affordable properties.

"The housing crisis now impacts on many income groups," he said. "There's a massive demand for affordable housing but not enough to go around."

Flagship, which manages 28,000 homes across the Eastern region, is looking to deliver a further 1,000 annually, through an investment of almost £700 million in Suffolk and Norfolk over the next five years.

Traditionally, most of its new housing has come from the affordable element of private-led schemes, which developers are required to build as part of their Section 106 contributions.

But now Flagship is leading more of its own developments and entering into "50-50" ventures with commercial house-builders.

Although Mr McQuade said he wanted many of the homes to be available at social rent, he claimed subsidy reductions had made this increasingly difficult.

"The model for housing associations has become a lot riskier over the past 10 years," he said. "It no longer works financially to have large programmes of new build at 60% social rents. That's the main reason they're now selling on the open market - so they can raise funds to meet the desperate need for social housing."

Mr McQuade said demands had reached such extremes that investment companies had begun launching 'for profit' housing associations. "These companies have seen the housing shortage and view it as an opportunity, both from an investment point of view and because there's a desperate need," he added. "They see it as a market they can contribute to; they recognise the traditional approach alone won't solve the shortage and meet the demand."

Last week, Flagship became one of 14 housing associations to partner with Legal & General to help deliver plans for 3,500 new affordable homes.

Flagship's managing director Marie-Claire Delbrouque said: "We're delighted to be working in partnership with L&G, through this new collaboration we hope to create more sustainable, vibrant and healthy communities - moving us one step closer to our ultimate goal - solving the housing crisis in the East of England.

Ben Denton, managing director, Legal & General Affordable Homes, added: "After a rigorous tender process, focusing on the quality and customer service offering of 140 UK-wide housing associations, we have now established an experienced panel of management partners. With residents already moving into our first schemes, this represents another milestone as we continue to pioneer the Institutional Registered Provider model. There is an urgent need to keep innovating in his sector and to provide quality, stable homes for the 1.1 million households on waiting lists in England."

'Modular' homes to reduce costs

Housing associations are looking towards new construction methods to reduce costs and increase supply of affordable homes.

Flagship Group recently completed a scheme using factory assembled 'modular' housing in Newmarket - and is seeking to invest in more.

The properties, which were sold as shared ownership, comprise of factory built modules, which were craned into position.,

David McQuade, chief executive, said that while the industry is still small-scale in the UK, it has become a major housing contributor in countries such as Germany, Holland and Japan, where Toyota has a factory producing homes on a production line.

"Those methods are increasing," said Mr McQuade. "It's still nowhere near the volumes of traditional house-builders but it's seen as an important theme for the future. We're investing in that to drive down costs so we can make it cheaper for the customer and speed up supply."

Article from Andrew Hirst, EADT Investigations Reporter - https://www.eadt.co.uk/news/flagship-group-david-mcquade-highlights-affordable-housing-crisis-1-6395872