The UK is facing a severe housing crisis – a quarter of homes don’t meet necessary standards, with 12% being particularly hazardous. Evidently, our current approach is failing.
To try and alleviate the rental housing problem within seven years, the UK needs to invest a staggering £250 billion into housing. This challenge requires more than just the building of new homes; we need innovative strategies that make use of our existing housing stock.
Since most homes standing in 2050 have already been built, retrofitting them is our best bet, especially since there are over 34,000 long-term vacant properties. The potential lies with institutional investors, who have barely tapped into the Single-Family Rentals (SFR) market.
Building New Isn’t Solving the Problem
Historically, we’ve relied on constructing new housing to fix market issues, but the production is not keeping pace with demand.
Recent data shows new home completions are far below necessary levels, and developers face many hurdles like expensive land, complex planning processes, and increasing construction costs – the latter worsened by the pandemic and the Ukraine crisis.
The resulting inflation and interest rate spikes are making some housing projects unfeasible without public funding. For instance, inflation has swallowed over £560 million of money designated for leveling up communities. Costs in utilities and labor have also surged.
Given these ongoing market difficulties, it’s clear that new builds alone won’t generate the quality homes needed. Instead, we should focus on making existing properties more attractive for long-term investors wanting to offer quality, affordable rental housing.
Retrofitting: A Dual Benefit for Investors and the Environment
Retrofitting is a dual opportunity; it’s an untapped market for long-term investors and can rapidly upgrade current housing. Our data suggests retrofitting can make homes twice as carbon efficient and affect triple the number of homes compared to new build rates.
Retrofitting also significantly benefits renters with energy cost savings and contributes to environmental sustainability by reducing carbon emissions. Compared with new buildings, retrofitting existing properties greatly reduces embodied carbon – emissions related to construction.
This makes retrofitting appealing for stakeholders focused on environmental, social, and governance (ESG) goals, as it maximizes positive societal and environmental impacts. Additionally, retrofitting within current neighborhoods can prevent rent hikes that displace local residents, thereby helping maintain community structures.
Leveraging AI for Retrofitting
To take full advantage of retrofitting, cutting-edge property technology like AI and predictive analytics is needed. These tools can help investors identify profitable regions and properties for retrofitting before prices change.
Predictive technology can analyze numerous local factors – from commute times to school quality – giving investors a detailed outlook on supply and demand dynamics. This data ensures that investment goes into areas where it can best improve living conditions and yield financial returns.
This intelligent tech enables informed investment decisions, pairing them with property tech to speed up and scale responsible retrofitting investment opportunities.
