In the autumn of last year we published our far-reaching report on the future of Hertfordshire – highlighting some of the challenges and opportunities faced by the county.

Many of these findings still hold weight and if anything the experiences of the last 12 to 18 months have brought some of the issues identified into even sharper focus.

The county remains one of the fastest-growing regions in the UK, with the technology and life sciences sectors in particular gaining momentum.

New growth is likely to be focused in the ‘innovation corridor’ between Cambridge and London and around areas of existing infrastructure such as the M1, A1(M) and M11. The A414 (which runs from Hemel Hempstead past St Albans, Hatfield, Welwyn Garden City and Hertford before ending across the border in Essex) will also be a focal point, with 50 per cent of the homes currently planned for Hertfordshire to be delivered in this area. 

But this activity continues to be threatened by housing affordability. Hertfordshire has seen house prices increase since the outbreak of the pandemic – with our own research showing that just under half of all wards in the county have an average house price of £500,000 and above. In commuter hotspots such as St Albans, Stevenage, Hatfield and Welwyn Garden City price growth has been even more pronounced.

This has made it harder for first time buyers to get themselves onto the property ladder and – in some cases – for employers to attract and retain the young professional workforce they require. Indeed, according to Savills research, just 10 per cent of households in the county are classed as ‘Aspiring Homemakers’ – people aged in their 20s and 30s.

So what can be done to help Hertfordshire make the most of the opportunities ahead? The Help to Buy scheme has been relatively successful in recent years – supporting 50 per cent of new home sales in the county since March 2019. But this is set to end by April 2023 and any reservations must be made by October 31 this year.

Other initiatives such as Shared Ownership and the Government’s First Homes scheme may well plug some of the gap. The latter will offer first time buyers in England a discount of 30-50 per cent on a property’s market value – however the scale and impact is likely to be very different from what we’re used to.

With value caps set at £250,000 it also remains to be seen just how much of an impact it will have in counties such as Hertfordshire where the average house price is significantly higher. In areas like St Albans, for example, where affordable pressures are most acute, it is estimated that only 22 per cent of households will be able to afford a 700 sq ft property inclusive of the 30 per cent discount.

It is therefore possible developers in these locations may only build smaller First Home properties that fall within the value cap, instead of delivering the family homes for those on middle to lower incomes that are in such high demand.  

First Homes is therefore unlikely to fill the void left by Help to Buy on its own. Instead, developers may need to look to other tenures, including rental stock.

Currently, most operational Build to Rent (BTR) homes across England are urban flats. But increasingly, suburban family homes are being delivered. Interest in this sector continues to grow and we expect BTR delivery to ramp up in suburban locations over the next few years.

Hertfordshire is a county ripe for this type of expansion. Many privately renting families are unable to access homeownership and are seeking to rent in suburban locations, with access to local employment and good schools. Broxbourne and Stevenage have a particularly high proportion of families currently renting, at 34 per cent and 31 per cent of households respectively.

By including BTR as an alternative it also allows developers to accelerate the delivery of larger sites via the provision of an additional parcel which does not compete with, but can actually promote private sales.

In a post-Help-to-Buy world, diversification and a mix of tenures that cater for a range of households will be key to ensuring employers can attract and retain the younger workforce required if counties like Hertfordshire are to unlock their potential.

Further information

Contact Molly Eyles or Abigail Jones

Contact Savills Development