‘This is the Volkswagen Beetle of one-bedroom flats,” declares Marc Vlessing, the Dutch-born chair of the UK developer Pocket Living, as he gives a tour of the firm’s latest apartment block, opposite the William Morris gallery in Walthamstow, east London.
Like the Beetle, the flats are designed to be compact but practical, with higher ceilings, wider doors, floor-to-ceiling windows and less corridor space than usual. The building has lightwells, communal garden roof terraces and cycle parking. Vlessing recalls that his mother said, when she first saw a Pocket site: “I don’t know what’s so special – in Holland we have this all the time.”
The UK has a long-running shortage of affordable housing and Pocket Living wants to attract low- to middle-income earners who have been priced out of the market in the capital. The company, which receives funding from the Greater London Authority, has carved out a niche building smaller-than-average flats classed as “affordable” – 20% cheaper than the average local market value – which are aimed at first-time buyers. It has built 1,280 so far, with another 400 to come in the next couple of years.
Vlessing has been heartened by the Labour government’s ambition to build 1.5m homes across the UK over the next five years, underpinned by planning reforms, with a focus on affordable homes. “The state has to be the ringmaster,” he says. “You really need to bring in the big guns … the new towns and the new town extensions.”
To deliver new towns like Milton Keynes in 1967, he argues the government must set up “development corporations which will pool the planning of two to three local authorities, with special planning powers to cut through within a reasonable amount of time what needs to be achieved in terms of infrastructure, transport, health, education. You need these development corporations at scale across the country.”
Vlessing is calling for more power for city mayors – encouraging them to compete with each other for public funding for development corporations – and for compulsory purchase orders allowing the latter to buy privately owned land. “They have to bring the vision, they have to bring public land. The state will bring cheap funding.” A development corporation has been proposed for Cambridge, which has long struggled with a housing shortage, which he thinks will be successful.
However, Ebbsfleet in Kent, picked by George Osborne in 2014 as the first new garden town in 100 years, demonstrates the challenges – only 4,000 of the promised 15,000 homes have been built so far by the local development corporation.
One of the problems the sector faces is the death of the small or medium-sized developer, Vlessing says, urging the government to step in. Around 4,690 construction firms went under in England and Wales in the year to June, up 2.1% on the year before, accounting for nearly 17% of all company insolvencies, official figures show, amid high interest rates and cashflow issues.
The complex planning system, which the Labour government wants to streamline, is “such a barrier to entry that new entrants don’t come”, Vlessing argues. He contrasts this with Germany, where homes are mostly built by medium-sized regional developers.
The decline of small UK firms means big housebuilders lack a talent pool from which to recruit skilled executives, and is also a drag on housebuilding because smaller developers are better at dealing with nimbyism because they know local politicians, he says.
Pocket Living had planned to venture outside London, but it has been too difficult, Vlessing says with some regret. “For me to go and open up Pocket in Bristol or Bath, or any of these areas where they need us, is quasi-impossible. The local politics are internecine and complex – there’s already a mountain to climb in the 32 local authorities that we have in London, and I wouldn’t know where to start going outside.”
Vlessing says he was happy to have reached an agreement with a contractor over fire safety repairs at a 39-flat block in Greenford in west London without going to court, with work starting this month, after Pocket came under heavy criticism over defects and Liberal Democrats at city hall urged the London mayor to stop public funding to the company.
He defends the company’s stance, insisting Pocket was not directly responsible and that the block had been signed off by building inspectors. To prevent another tragedy like the Grenfell fire that claimed 72 lives, he suggests the UK needs a national body to oversee building inspections.
Vlessing, who grew up between Amsterdam, Brussels and London, is a keen jazz saxophonist and in his youth toured around Europe with his musician friends. He decided to become a banker because “I was a foreigner in England and I just wanted to have my own place … The other reason was because my father said, If you don’t do finance early on, you’ll never understand it.”
He started in corporate finance at County NatWest, and then set up a media finance consultancy where one of his clients asked him to run the West End theatre and cinema company Crescent Entertainment Group. He noticed that people working there were paid relatively little and eventually left because they could not afford housing.
The idea for Pocket Living was born, and in 2004 he set it up with Paul Harbard, former finance director at the housing association Peabody. Vlessing owns 20% of the developer while Harbard has 10%, with the rest held by the US real estate firm Related Companies, whose chair and founder, Stephen Ross, also owns the Miami Dolphins American football team.
Pocket’s sales have been slow, despite a pickup in the weeks after the Bank of England’s August interest rate cut. “We’re still in the post-Covid, post-cost-price-inflation, post-interest-rate-increase shock; it’s definitely a little slower than it used to be,” Vlessing says. Pocket has been in the red for four years, with a pre-tax loss of £13.9m in 2022, or a gross profit of £939,000. Turnover grew by 54% to £27m, but was less than half its 2020 level of £56m.
The company initially built about half its homes as modular units, including an award-winning triangular tower clad in green terracotta tiles in Wandsworth, south London, but has had problems with its suppliers. A number of modular firms have gone bust in recent years and Legal & General, one of the bigger players, shut its modular factory near Leeds last year.
Now less than 15% of Pocket’s new homes are modular, but Vlessing insists: “I’m still passionate that precision-built factory-enabled housing needs to play a vital role in the renaissance of the British housing market.” Fast-build modular housing is popular in other countries such as Germany, Sweden and Japan but remains nascent in the UK.
The two company founders plan to sell their stakes to majority owner Related soon, Vlessing says. In April he stepped back from being chief executive to become chair after nearly 20 years, and is looking for another role in areas such as energy, transport or health. “If we’re going to transform this country, then that public-private partnership is at the heart of it.”
CV
Age 62
Family Married with an adult daughter and son.
Pay Not disclosed.
Education School in Brussels; BA politics, economics and law, Buckingham University; MSc (Econ), London School of Economics.
Last holiday “Walking the walls of Lucca in Tuscany.”
Best advice he’s been given “Don’t confuse action for purpose.”
Biggest career mistake “Underestimating the challenge of aligning the public and private sectors.”
Phrase he overuses “And so?”
How he relaxes “Playing John Coltrane licks on my Selmer Mk VI tenor sax.”
