BRiCS is a new housebuilder on the block which is attempting to raise the bar on quality and sustainability. James Parker speaks to co-founder Hugo Reeve.
BRiCS is a new SME housebuilder targeted at building high-quality homes in the south east, which launched just before the pandemic hit in 2020. It was founded by ex-Crest Nicholson directors Hugo Reeve and Timothy Sadler, and professionals from that firm as well as other plc housebuilders. They had seen how it was done at the volume housebuilding end, and wanted to combine their skills to offer a different proposition.
Reeve tells me that the focus is on creating designs tailored for their settings that will help create “sustainable communities.” He explains: “We’ve all been schooled in place making and good design, creating places with a more bespoke, individual character that respects its locality and setting.” Supporting this, he says that BRiCS “chooses its architects very carefully, for each scheme to have the right skill set; it is more expensive, but we get a higher value result.”
Backed by an investment fund, the firm found its feet with a strategy to build schemes ranging from 30 to 100 homes, mainly in Hampshire and Sussex, now with a team of around 12. The aim is schemes “large enough to create a character, with at least a street or two.”
In terms of the business plan, having already completed affordable homes as part of Shopwyke Lakes in Chichester (to a higher quota than the Section 106 required), Reeve says the aim is to pursue a mix of similar schemes in addition to private sale. He says this is partly pragmatic, to give BRiCS a healthy balance between private sale and affordable housing for Registered Providers in its work stream; the firm is yet to complete its first private sale development.
Pandemic origins
The fact that BRiCS was launched a month before the arrival of Covid was not ideal timing to say the least. However the nascent firm having emerged from the pandemic a growing success is even greater testimony to its strengths in the current market. At launch, there were a couple of higher-rise Build to Rent projects on the books to tide them over, but as lockdowns loomed, “the opportunities rapidly disappeared,” and it was a slower start than anticipated.
The board had to pivot towards a clutch of smaller “suburban” projects, says Reeve. Fortunately, the firm’s investor was “very patient” and believed in the combined experience and quality in the team, putting in more equity as needed, as the firm grew. After approximately a year, BRiCS secured its first ‘serious’ development site, for 77 homes, which then took a further year to go through the design and planning process. Reeve said for a start-up SME to make the jump to a larger scheme so quickly demonstrated the capacity of the firm which is now bearing fruit.
Planning for a sustainable future
It has been challenging journey to get the business on a firm footing, says Reeve, given the partly unforeseen external pressures, but the staff’s experience in the sector, plus a good external contact base helped see it through the rough headwinds of the early couple of years. The exodus of many planning officers during and post-Covid (with many not having to return to office posts since), and lack of local authority resources from cost pressures, has resulted in a “collapse” of the system, says Reeve.
He believes that the Government’s plans to recruit another 300 planners, although the right approach, is unlikely to plug the current yawning gaps. Reeve explains: “It’s very small in the scheme of things. It’s not just planning officers that are needed, but County officers too.”
He says that budget cuts and staffing at local authorities have been so severe that the time taken just to process applications make the process “almost unviable as an SME.” This means a shortage of land with planning permission; “any land that does come on to the market with some form of permission is fiercely fought over.”
Delays in bringing in necessary infrastructure are another obstacle which has seen BRiCS having to grit their teeth to see margins come to a sustainable point. Reeve says that “a big discussion needs to be had with regards to the relationship between section 106 and the Common Infrastructure Levy, because a lot of it still comes down to the negotiation and discretion with the local authority, a lot of whom are very short of finance.”
He backs the mandatory local housing targets with the new Labour Government announced as a policy soon after taking office. “It’s desperately needed, but will take time to come through the local planning processes, to change the course of the ship to the extent that land availability and housing delivery frees up.” Also Reeve welcomes the new ‘grey belt’ plans, but says that there is ambiguity as to what will and won’t be deemed ‘grey.’
On financing, he admits that despite the investors’ valuable trust in the firm, the rigmarole of bank financing has been the real challenge, despite the “availability and appetite” being there. “Taking it through the legal process with the bank’s solicitors has been very torturous, expensive and time-consuming.” He believes there’s an erroneous expectation in the sector that all loans should be “completely risk free, when development isn’t.”
Performance anxiety?
Builders face more scrutiny than ever before on the performance of new build homes, given the drive to net zero, and the incoming Future Homes Standard which is designed to create ‘net zero ready’ homes as the grid continues to decarbonise. But what are the realities of doing this on the ground for a new SME housebuilder such as BRiCS? Reeve says that his firm has already embraced changes, with one scheme being fully electric, but they see sustainability in housebuilding as a wider issue than simply how well a building performs and the technology installed.
“It’s as much about lifestyle, access to amenities, open space and creating a more sustainable community in itself,” he says. However, as well as the top-down targets and the demand from some buyers for better performing houses, does he believe that some of the momentum for ‘green’ new builds needs to come from developers? Reeve insists that “the appetite for greener homes is there from both developers and purchasers” but “what is more acute, and what we are trying to focus on, is lower running costs. Lowering bills, that’s what our purchasers are really focused on.”
He continues that with mortgage rates still being higher than previously, this is currently the key issue affecting the buying market, and that focusing on the fabric of homes “and trying to take it a step further than the Building Regulations” is the goal.
Viable futures
With their solid range of experience, BRiCS are built for a resilient future, provided some of the key moves which the industry has been crying out for on planning and targets are honoured at a central level. Reeve and team were acutely aware of the need to grow to a certain size before the market would take them seriously as a viable land purchaser for larger schemes.
With schemes including a parcel of a site earmarked for SMEs now acquired from the Ministry of Defence, BRiCS are again looking to raise their game and broaden their scope for larger developments. They are well on the way to being a recognised name providing the in-demand, higher quality private sale schemes in key locations, and the proof will soon be evident.
As a new SME, Reeve and colleagues are conscious of what he says are “horrifying statistics” around the amount of small and medium housebuilders that are currently operating, compared with 20 years ago. He says that a key issue is resourcing to tackle the layers of regulations, “well intended but often at cross purposes,” from BNG to the Future Homes Standard: it “starts to require a large team of people.” This can be met by larger plcs, but for a small company it “becomes a lot more challenging.” That, plus the time schemes are taking, and the financing issues, makes launching a new venture a task not for the faint hearted.
So far, BRiCS are weathering the storms admirably, and Hugo Reeve says that its current private sale schemes “have the opportunity to be really well designed; they sit within design codes that are pushing the quality of design upwards.” Although working at the higher end of the market currently, this is one housebuilder that is helping counter the stigma of poor quality which has dogged parts of the industry for years.