Kit Houses IKEA Kit Homes

Date Published:

03/06/2008

The ethos behind the concept is part of the package, explains Alan Prole, marketing director of Live Smart @ Home, influencing who will get the keys to one. 'They're not for buy-to-let customers. The target is the affordable housing market, primarily working people and young families priced out of the open market.'

Although mostly aimed at people earning between £12,000 - £30,000, 'others wanting a permanent home will not be excluded', he adds. IKEA's Gateshead store markets the first development, with prices ranging from under £100,000 for flats to below £150,000 for houses.

In Sweden, demand is such that lotteries are held to decide who gets one, and Prole says interest here is already extremely high. People will register and referencing will be used to select owners, 'to avoid stampedes'.

Try Before You Buy

They don't have to buy outright, either. 'They can, but they can also rent for a while to try it out, and buy a bit, if they can't afford the total cost'. This 'very flexible tenure' rather than standard shared ownership also means that people won't lose their homes if, say a partnership splits up, because Live Smart @ Home would be able to buy back into the property. 'We will always be involved as managers and part owners - we have a long term interest,' he adds.

Resales

Resales will always be carried out through the company which will be selective - but this shouldn't cause a problem, he says. 'We'll have a list of approved purchasers but we can also buy it back ourselves.' Will such a set-up - aimed at keeping the homes affordable - hinder the BoKlok first home buyers' ability to accrue equity though? Prole thinks not. 'Not only will there no way be negative equity on these, we've got every confidence in their performance as both a product and in the marketplace.' So confident that a buy-back guarantee is likely. 'We're committed to retaining affordability but we're confident people will share in a reasonable appreciation.' This is partly because the development aims to benefit what are, in essence, regeneration areas, and the price-control concept will be site-specific.

Any conditions, such as covenants, attached to homes will always have a financial cost, says Michael Hennings, chairman of the Royal Institute of Chartered Surveyors north east region, and associate director with construction and property consultants Summers Inman.

Eco Credentials

But he is enthusiastic about a number of factors, including design quality. 'They're excellent, not just the buildings, but the space around them. 'It's fine that they're in regeneration areas because a good design can lift an area - and if so there is a potential to increase value.' But, he says, it is the home's energy efficiency which gives them an edge, with the Code for Sustainable Homes, and as new legislation comes into force.

The homes have super high insulation qualities (and meet and exceed current UK building regulations) and, says Prole, they are aiming for an 'Eco Homes' excellent rating for the Gateshead development. Hennings says while initial novelty value could influence sales 'an energy efficient home will sell itself', appealing not only to 'ethically aware' customers but anyone who wants lower bills.

'It will be important to monitor prices,' says Lucian Cook, director of residential research at Savills property firm. Affordability might be more a reflection of location and size, rather than cost of construction, including reduced build time. 'In many cases prefabricated housing is no less expensive to construct than mainstream new build. 'Opening rental returns would be good, given that initially this is new build stock which may have a certain cache being associated with IKEA.'

Capital values of post war prefabricated housing, such as Woolaway-type bungalows, increased, but mainly because of the value of the land they were sitting on. Being on their own plot they also allowed for further extension, which flats and terraced houses do not. The main concern with kit houses is lifespan and build quality, but if good the effect on investment returns will be limited, he added.