The 40-year-old is overseeing the construction of 1,700 homes with plans for another 6,000 in a bid to tackle Britain’s social housing crisis
James Lidgate bought his house in St Albans with the view to knocking it down to build his dream home. He hasn’t got round to doing so yet, mainly because he is flat out building thousands of new homes for everyone else in the country.
Yet Lidgate doesn’t work for what you or I would think of as a housebuilder, certainly not a conventional one. He is director of housing at Legal & General, the giant insurance and pension fund institution, which is hellbent on turning Britain’s housing market upside-down and cracking our housing crisis.
Nor is he shy about Legal & General’s ambition: “We want to be the biggest multi-tenure housebuilder in the UK.” The press officer who sits in on our meeting at L&G’s smart City office in London, smiles and adds, “Leading”. Lidgate, with a big grin, says: “Biggest.”
He could be right. In one of the boldest moves to diversify yet undertaken by a UK financial services group, Legal & General plans to build at least 70,000 new homes, for sale and rent, over the next five years. To put this ambition into context, around 130,000 houses were built in the UK last year although 250,000 new homes a year are said to be needed to meet housing demand.
Listen to Lidgate for just a few minutes and there’s no doubt Legal & General has the clout to be one of the biggest players in the industry. And the most revolutionary, with the aim of doing to housebuilding what Henry Ford did to cars. It has the land (around 3,500 acres with potential for planning consent), the capital, and it makes its own state-of-the-art houses too.
So far, L&G has spent a billion or two on direct investments but the commitment is much greater.
Crucially, there is the will. Legal & General’s chief executive, Nigel Wilson, has made house-building, and reforming the housing market, into something of a crusade, having stirred debate about releasing more green belt land for new homes and rubbishing what he calls short-term measures, such as the Help-to-Buy schemes.
If Wilson is the visionary, then Lidgate is the chief strategist, although I say he looks too young to head such a task. He laughs: “Nigel said the same thing when we first met. I am 40.”
He came to housing by chance rather than design. After reading geography at Durham University – good training for land-buying – he found work experience with a house builder while considering what to do. The work “caught my imagination”, he says. “What you do has a tangible result, and makes such a difference to people lives.”
After working at Laing Homes, Berkeley and Bellway Homes, Lidgate was poached to head up residential homes in Legal & General’s Real Assets division nearly four years ago. Then, two years ago, he was snapped up to run all of the housing operations under Legal & General Capital, the group’s early-stage investment arm which puts new capital into sectors such as housing, infrastructure, clean energy and small and medium-sized business finance where it sees shortages of investment and innovation. “I admit I was slightly wary to start with as I was worried L&G might be a sleepy giant, and might not be serious about house building. I soon discovered that couldn’t be further from the truth.”
His mission has four main lines of attack: buying strategic land; building houses for sale, including big inner city urban regenerations from Canning Town to Newcastle; build-to-rent at scale; and social housing. On the housebuilding front, Legal & General Capital builds homes for sale and rent as well as owning a 48 per cent stake in upmarket housebuilder, Cala. It has 15,000 homes in the pipeline. Legal & General also recently bought a factory in Leeds, with the capacity to make thousands of precision-engineered modular homes made to the highest quality standards – the first of which will soon be rolling off the lines.
In the build-to-rent sector, Legal & General has 1,700 homes under construction with plans for another 6,000 new homes over the next two years. It has just bought Renaissance Villages as part of its Later Living retirement homes business and has already invested a billion pounds into student accommodation. “Build-to-rent has big potential for us. It’s a trillion pound market but is run like a cottage industry, and often badly run. If you can get scale, then we should be able to make great efficiencies.”
More social housing projects are also on the cards. He applauded Theresa May’s recent move to inject another £2bn into social housing programmes via grant funding, saying that it was “the start to opening up social housing to new players”.
While the amount has been criticised as small fry, he says the direction of travel is the right one. “It means that housing associations and housebuilders such as us can work directly with local councils or other government bodies to buy land directly – cutting out the housebuilders and developers.”
“There is masses the government can do to reform this sector: more than £10bn is paid by the taxpayer to private landlords through housing benefits. This is a crazy amount.”
Just as Lidgate would like his dream home to have all the latest technologies, so L&G wants to push up standards across all new buildings – and hopes the industry will catch-up too, as most housing is not ‘fit for purpose’. “I subscribe to the view that the housing market is broken. It doesn’t work for the majority of the population. Many new houses are not being built to last.”
He adds that L&G wants to challenge the public perception that new homes are inferior to older properties – one of the reasons it has its own factory. “Our aim is to future-proof new homes. The most important factor in housebuilding is to get the fabric of the home as good as you can. Then you can fit new technologies as they emerge,” he says, adding the goal is to build carbon-neutral where possible.
“There’s no point fitting heat pumps, for example, when in a couple of years time they will be overtaken by new energy sources. We have a team of researchers going around the world looking at the best and latest designs.”
Slashing the time it takes to build houses is another goal. At present it takes up to 15 years from buying land to getting projects built. Lidgate hope to halve the time and shake-up how new housing developments fit into their localities.
The company is also fervent about the broader social and economic value of housing projects, both for individual homeowners and the wider neighbourhood. Which is why it has come up with a Social Value Charter, the first of its kind for the UK, to monitor the value developments have for the local community. “We want to measure our involvement to create sustainable communities. You could say this is a bit of a mission for us.”
The charter has been already used in L&G’s first big project, a 250-acre site called Buckler’s Park in Crowthorne, Berkshire, which will create 1,000 new homes as well as a primary school, care home, community facility and public open space and nature reserve. Around 200 homes should be ready by the end of the year.
At Crowthorne it worked with the councils and interested local stakeholders to find out precisely what the public wanted. “Rather than paying lip service, we went out and spoke to people directly about what they would like to see in the development and what we could bring to it.”
This included talking to people involved in the A&E at the local hospital, to visiting school heads to find out what worried them. “We talked about whether we could help talk to the children about the industry to whether the catchment area was too big, too small and how we could help.” Surprise, surprise, the parish council voted for the development. “This is unheard of in local planning.”
Of course Legal & General’s foray into housing is not entirely altruistic: by taking a holistic view of the housing cycle, it can pivot investment to avoid economic downturns, giving it an edge over traditional builders. At the same, earning good returns for investors by taking the long view. And Lidgate hopes others will follow the company’s lead: “There is room for partnerships and others to invest alongside us.”
Original link - Independent
