“Alternative residential” schemes are unlikely to contribute to a significant increase in the housing supply without major change in the sector, according to a new report from international legal practice Osborne Clarke. 

The firm’s research – “Transforming the way we live - a roadmap for taking Alternative Residential mainstream” is the first in the UK which takes a holistic view of the sector. It follows interviews with leading players including developers, investors, housing associations and real estate and planning advisers. 

The report says that major changes are required before Alternative Residential – which includes professionally managed accommodation such as build to rent (BTR), student accommodation, co-living and senior living - can have an impact on the housing crisis. 

These include the introduction of government planning reforms, different social demographics fully embracing it as an attractive living option, and investors and lenders take a longer term view on returns. 

The Osborne Clarke report says student accommodation has paved the way for the Alternative Residential sector, with BTR also rapidly gaining momentum over the past few years. Investors are increasingly viewing these assets as a valuable part of a healthy portfolio of mixed residential stock. 

Build to rent, co-living and senior living housing schemes have largely been imported from countries such as the United States and Germany, where they are accepted by local government, investors and banks, and society at large, as successful solutions that can help meet local housing targets and as popular options for individuals and families. 

The report says the UK government’s target of building 300,000 homes a year was always ambitious despite concerted efforts to stimulate demand through financing options such as Help To Buy, through local housing targets, and through the easing of some planning restrictions such as the conversion of office buildings to housing. 

Even with those incentives, it says the ability to buy your own home has become increasingly difficult for many people, and that renting, as a long-term option, has been bridging the gap. 

Osborne Clarke’s report suggests that there are ten conditions that will need to be met before Alternative Residential can truly shift into the mainstream in the UK. 

These include: 

• A recalibrated planning system (including no inbuilt bias for build to sell) 

• Bridging the skills and capacity gap (including more construction tech and modular buildings)

• Finance (including new valuation models and changes to the tax regime)

• Social and political change (including incentives to encourage life-long renting) 

But according to the research there also several internal factors which are the responsibility of the industry itself. 

These are: 

• An investment that stacks up (including higher density building that balances amenities versus rents) 

• A sense of home (sites must be designed to maximise community and wellbeing)

• Built for beauty and sustainability (a drive for decarbonisation must be reflected in design and operation)

• Quality (success will be determined by user satisfaction)

• Smart buildings (tech is the enable of many services and frictionless living will become more important)

• Brand or location (location remains important but brand is increasingly recognised by both younger and older segments of the market, with WeWork and other commercial brands providing a useful template) 

Conrad Davies, Bristol-based Partner and head of the real estate and infrastructure team at Osborne Clarke, says: “Alternative Residential schemes have the potential to provide a significant injection of homes into the housing supply.  

“They offer new models of connected and shared living which directly appeal to younger people and which have an established track record elsewhere in the world. Senior living schemes are now being developed with onsite care and dedicated facilities but we are a long way behind other countries.”