Disrupting housebuilding

Every year, everyone seems to agree that we need to build more homes. But while the number was growing up until the end of last year (we shall see what impact COVID has had), we're still a way from the government's target of 300,000 a year. And even at current levels (around 240,000 built or converted last year), house prices continue to soar. The average house price is now over 10 times the average household income.So how do we build more homes? More importantly, how do we build more homes in the places people want them? Homes that fulfil people's changing needs? And whose construction and use has a minimal, or even positive impact on the environment?I think the answer might come from some of the most successful businesses of the last few years. Businesses that build scale through networks of small operations, like Uber and AirBnB. These businesses have their ethical issues, and their operational issues too. But the principle of scaling small things is a powerful one.This is an essay. It's not something anyone has paid me to research. And hence I'm not going to get everything right here. But hear me out. I'd love to hear your feedback. This is my recipe for a disruptive housebuilder.

Three principles

My disruptive housebuilder would operate on three simple principles:

1. Make it easier to build than buy
2. Make it cheaper to build than rent
3. Give people security and sustainability

How would you do this?

Deeply digital

Imagine aggregating all of the small plots of land around the UK into a single, liquid marketplace. Imagine wrapping around them a layer of digital services for surveying and planning, creating a low friction pipeline for acquiring and developing sites. LandInsight has already done most of the work here, with its award-winning platform (I was one of the judges a few years ago when it won the PlaceTech Prize for Innovation). Take its API and build from there.Now people can search for parcels of land near them and begin to progress them. A truly liquid market for land with some of the complexity of planning and utilisation removed will attract more people wanting to sell their land, increasing the size of the market.This somewhat glosses over the complexities of the planning space. But many, small scale projects should be much easier to progress than large scale projects that attract a lot of attention. Especially if you standardise some of the homes.

Open Source Design

I'm not talking about ticky-tacky boxes on a hillside here. I think the starting point for this housebuilder should be WikiHouse, an open, modular system of house design with a relatively low carbon footprint and a huge degree of flexibility. Imagine being able to design your house in an app like the IKEA kitchen configurator. Once you have picked your plot, the system pulls in 3D scans of the area and allows you to overlay the footprint and a 3D render of your house, with a range of design options and interior fittings from its catalogue. Or you can choose a bare shell with utilities and fit it out yourself.The great thing about WikiHouse is that it is largely manufactured off-site in small, local workshops. You don't need to own these as the developer, just have access to a network of them and monitor standards. Over time this will get easier as individual housebuilders start to contribute reviews.Once the design is approved, customer can select a local manufacturer to produce their panels and frame. You will also need local contractors to assemble the home. But the nature of WikiHouse means it requires a lot less skilled labour - an issue already and one that will grow as we go through Brexit. You could either plug into an existing network of contractors, like RatedPeople. Or build one up. And as the business grows, you are likely to develop a class of freelance contractor that specialises in assembly.

Funding

This all sounds well and good. But it's not that radical. Mostly just plugging together existing networks with some nice front end design. What makes this housebuilder really disruptive is the funding. Imagine if you could take great gobs of investment, from pension funds, venture capital, or even government, and use it to do home financing differently. After all, based on the business described above, you wouldn't need to spend that much actually building anything. You're leveraging existing assets. And there is a lot of cash around at the moment, seeking reliable returns. Where better to invest than in property? Even with the population set to start declining in the second half of the century, it doesn't look like demand for quality homes will shrink any time soon.Use that funding to make deposits small. Not much bigger than you might put down on a rental. But base it on smarter credit checks that overcome some of the weaknesses inherent in current systems - like the ones that would deny me a mortgage because I'm self-employed even though I haven't missed a payment in 15 years. Though there are arguably issues with privacy, banks in China have been making heavy use of alternative data sources. Not just "have you paid your credit card bill in the past" but who you are based on social media and more. This has allowed them to process loans automatically, and incredibly quickly, with very low rates of non-repayment.Offer people a truly flexible mortgage. Shared ownership options from 10% up to 100%. Make it variable over time. When times are good, increase your payments to buy more of the equity. When they're bad, trade equity for a payment holiday or switch seamlessly to interest only. The aim is to keep people covering the cost of the financing, but also to keep them in their home as long as it is viable.Make it easy for groups to buy together and trade equity between them. With our extended adolescence, it should be much less work for groups of friends to club together to build than it is right now. And the scale of their expenditure on rents should make mortgages eminently viable, were it not for the barrier of the big deposit.

Options for Everyone

Combining a tailored approach to construction, low-friction operations, distributed manufacturing and the utilisation of small plots, it should be possible to open up home ownership to a much larger group of people. People with the cashflow to fund it but who are priced out by the lack of supply and the scale of the up front investment. This should be an ideal investment opportunity for those seeking long term returns. And there is an enormous market to address, with people hungry for alternatives.

Ten ways to disrupt tomorrow

Last week I gave the closing keynote at the enormous RESI 2017 residential property conference, sharing a stage with the housing minister Alok Sharma, the BBC’s Mark Easton, Dame Eliza Manningham-Buller, and Blur’s Alex James.I wrote a talk for the event, but the night before I decided it was all wrong. Closing keynotes need to be full of energy — especially when people are still jaded from the previous night’s gala dinner. They need to give people some simple points to take away. And while they can summarise, the last thing people want to hear is a repeat of what has come before.Looking at the agenda for the previous days I decided I needed to come up with something fresh. This is what I wrote. Though it was written for a property audience, I think it has wider relevance. Have a read and see what you think.####I’ve been asked to talk to you today about disruption. In the next twenty five minutes I want to talk about ten things that are going to completely disrupt the physical world. Your business, your home, and everyone’s lives.But first I want to talk about what’s driving that disruption. Right here, right now there is one change driver that is bigger than Trump, bigger than Brexit, bigger than climate change. And it’s technology.Technology is driving change both more consistently and more persistently than any of these factors today. You may be able to roll back whatever decisions a politician makes, given enough time. But you can’t un-invent the smartphone, or the atom bomb — unfortunately, given the sabre rattling from a certain chubby dictator.

The appliance of science

When I talk about technology, I’m not talking about the phone in your pocket, though that’s part of it. I’m talking about technology in the broadest sense. The appliance of science. We are a race of tool makers who have been applying science since the first caveman or woman picked up a rock and realised it was a more efficient way to stove in the head of whatever animal they were trying to catch. Technology is maths, wheels and language. Which I guess makes Shakespeare a coder.Throughout our history technology has done one thing. It has lowered friction. Technology allows us to do things we couldn’t otherwise do more efficiently, quickly, and painlessly.But that gives whoever has that technology a competitive edge. Because if someone else has that edge, then we want it. It doesn’t matter if it’s countries competing in an arms race, companies competing in a market, or you trying to keep up with the family at number 42 with the nice new Merc.It is this competitive tension that keeps driving technology forward. The last ten years have seen technology transform our world. The next ten will see transformations of even greater magnitude.

1. The end of possessions

Technology has eliminated so much of the matter in our lives. Newspapers and magazines, books, paper in general. CDs, DVDs, Blurays and all the various paraphernalia needed to play them on.This has coincided with a shift to a much more experience-led culture. Expenditure on food and drink and holidays is up. People are focused on what they can do, not what they can own.There’s still huge — perhaps increasing — value in tactile experiences like vinyl, in the face of mass digitisation. But the larger trend is clear: we can achieve the same or greater experiences through fewer physical objects.

2. Personal AI

We outsource memory to other people in our lives. How many times have you relied on a partner or family member to remember someone’s birthday, the MOT, or home insurance renewal? Why shouldn’t we outsource to machines as well?The reality is that we already do. GPS has become our sense of direction, calendars and photos our memories.The next step is letting them filter the world, and even take buying decisions, on our behalf. Right now we put this power in the hands of third parties like Facebook, and subscription shopping services. When it should be our own personal AI, intimately familiar with our preferences and insulated from the influence of external parties.

3. Frictionless administration

With a personal AI hosting aspects of our identity, finance and vital documentation, we can look forward to truly frictionless administration. No more endless reams of paper or multi-page forms for every insurance policy, remortgage or investment. Our assistants interact with the APIs of any intermediary, in turn interacting with providers and third parties. Blockchain may play a role in providing a more secure and transparent record.

4. Everything is smart

Our personal AIs will be driven by data captured from the world around us, and able to shape that world to our needs. Because everything will be connected. It costs less than a couple of pounds to add WiFi to anything these days — a few cents to do it at scale. Eventually the cost of doing so falls below the return — however slight it might be. And so everything gets some level of smarts, for sensing or control.

5. Distributed energy

We can power this smarter world because three things are happening. First, the consumption of each unit is declining: desktop PCs consume around 400 watts, laptops 75w, tablets and phones just 10. Appliances get more efficient all the time.Second, our ability to generate electricity cheaply and cleanly is improving — particularly at small scale with solar. Wind is already markedly cheaper than nuclear, as the last round of bidding for UK energy supply shows.Third, we can now store energy better. The next generation of batteries approach the energy density of petrol and are made from cheap and readily-available minerals.

6. Everything is electric

Because of this, gas starts to look as unattractive as a home fuel as coal does to us now. Dangerous and dirty, people will bother less and less with installing gas supply in new developments, as electricity becomes the preferred technology for heating and cooking, transport and travel, as well as all of our digital appliances.

7. Autonomous construction

Machines can already lay bricks and pour concrete faster than people, with large-scale 3D printers now producing whole buildings near-autonomously from a recycled slurry. As this technology advances it will change the nature of construction and maintenance. Autonomous machines will follow digital instructions to create and complete whole structures, utilising new materials and modular techniques.Then machines will respond to sensor data to adapt those buildings to current need, within the parameters laid down by the original architects.

8. Dynamic addressing

Your phone is increasingly your address, enabling you to share your location with a high degree of accuracy with third parties. The incredible WhatThreeWords gives a unique address to every few square metres of the earth. Given these capabilities, why do we have everything delivered to a fixed physical address? New fraud controls mean we should be less reliant on address as a validation of someone’s trustworthiness. Why not send goods to wherever they want them — whether that’s where they are or where they will be?

9. Life through a lens

Yesterday’s Deloitte figures showed we spend an incredible amount of time staring at a screen. Tomorrow we will stare through it. Augmented reality enables more natural, human interactions with the digital world, and equips us with a general purpose sensor — the head-mounted camera — that enables a whole range of applications. I genuinely believe that in just ten years we will spend 10–12 hours per day in augmented reality, witnessing the world through a digital overlay. One that expands our senses, enhances our memory and cognition, and personalises our world. This isn’t a vision without risk, but I think it’s realistic.

10. Joy is paramount

One of the insights about the ‘millennial’ generation that I actually accept is the rising priority placed on experiences over possessions. While widely pilloried I think this can only be seen as a good thing in retrospect. We should enjoy life if we can, and our spaces and places, services and service, need to be shaped around that priority.

Identity duality: trust and preference

There has been an idea bouncing around tech circles for a while now. It’s about online identity and how we should return control of it to individuals.Right now, a lot of our digital identity is controlled by large corporations who profit enormously from that control. For reasons of fairness, privacy, and control, there’s an argument from the EU and others to take control from these large corps and give it back to individuals.

Trust and preference

When we’re talking about identity here we’re really talking about two different things, which are often confused in this debate.One is about trust: are you who you say you are. This is important for accessing everything from email and social networks to bank accounts and government services. A trusted online identity is a vital component for many digital services, with different levels of verification required for different tiers of service.The other is about preference. Based on who you are, what you have viewed and consumed, and the behaviour of those in your network, what might you want to consume in the future. This is the information that is so valuable to brands and retailers, and hence to the social networks.The argument for repatriating control of this preference information to individuals has been criticised for being somewhat ‘Ayn Rand-ian’. It is characterised as being all about the preference information: “Put property rights on that data and allow it to be traded. Free markets solve everything etc.”

Beyond commercialisation

There would be a lot of merit to this criticism but for two things. Firstly, the trade in this preference data has already been commercialised. Right now the rightful owners of this data are excluded from the market, profiting from it not at all and without any meaningful control over its use. Free markets may not solve everything, but a free market is infinitely better than the current one which is rigged against the consumer.Secondly, the financial capital bound up in preference data is inextricably linked to the social capital that creates the trust in our identity. The 'me' that posts and shares is the same 'me' that votes and banks, and the same 'me' that shops and clicks. Separating the three across the myriad ways that we log in and out of payment engines, social networks, shopping sites and more is near impossible. The various threads may not form a totally coherent whole but they nonetheless represent a single, if fuzzy, me.The argument that I should control this social aspect of my online identity has nothing to do with commercial gain. It’s a simple principle of human rights.Personally, I think there’s a valid argument to me made that we should be the ones to profit from choosing to share our own preference data. But the real argument for repatriating identity to individuals is that we should have the right to control who we are and how we present ourselves, whatever the domain.