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| Wanted: 'muscular, interventionist' London mayor to boost 'build-to-rent' | Wanted: 'muscular, interventionist' London mayor to boost 'build-to-rent' |
| (about 5 hours later) | |
| London’s absurdly high and rising housing costs cause an array of problems for the city and a vast range of its people, from the poor and low paid to middle income professionals in private and public sectors alike. The growth of the private rental sector (PRS) is a symptom of the problem - about 30% of London households are now accommodated by it compared with less than 20% at the start of the century. Can it also be part of the solution? | London’s absurdly high and rising housing costs cause an array of problems for the city and a vast range of its people, from the poor and low paid to middle income professionals in private and public sectors alike. The growth of the private rental sector (PRS) is a symptom of the problem - about 30% of London households are now accommodated by it compared with less than 20% at the start of the century. Can it also be part of the solution? |
| At last week’s PRS Forum for industry players and sages Peter Vernon, chief executive for Grosvenor Britain and Ireland, argued that it can. His speech to delegates at 155 Bishopsgate concisely outlined the potential for many more homes to be built in London specifically for private rent. For years, wise wonks have tried without great success to persuade more big investors to sink cash into “build-to-rent,” but Vernon thinks a breakthrough might be in sight. He quoted British Property Federation figures suggesting there’s around £30bn out there that will be looking for the right opportunities over the next five years. He then highlighted two of the various things he thinks are needed to “catalyse this market.” Here’s the first: | |
| A step change increase in the supply of developable land. With others, I believe this will require, in London, a muscular, interventionist mayor; a mayoral delivery body that identifies, assembles and designates sites for development, maximising the potential of public land and using CPO [compulsory purchase] powers if necessary, that puts in place the necessary infrastructure and then sells plots to those who want to build, sub-dividing larger sites to accelerate delivery. | A step change increase in the supply of developable land. With others, I believe this will require, in London, a muscular, interventionist mayor; a mayoral delivery body that identifies, assembles and designates sites for development, maximising the potential of public land and using CPO [compulsory purchase] powers if necessary, that puts in place the necessary infrastructure and then sells plots to those who want to build, sub-dividing larger sites to accelerate delivery. |
| And here’s the second: | And here’s the second: |
| I believe we need a clear and unambiguous planning policy for build-for-rent. At present, build-for-rent investors and developers just don’t know where they stand in London. The GLA has a draft but broad policy statement which each borough is interpreting differently. This ambiguity is creating a stand-off between the planning authorities and the private sector and holding back the investment of substantial private capital. I think we need a clear, city-wide framework that recognises that the economics of building rental homes is different from building homes for sale, and therefore requires a different approach. | I believe we need a clear and unambiguous planning policy for build-for-rent. At present, build-for-rent investors and developers just don’t know where they stand in London. The GLA has a draft but broad policy statement which each borough is interpreting differently. This ambiguity is creating a stand-off between the planning authorities and the private sector and holding back the investment of substantial private capital. I think we need a clear, city-wide framework that recognises that the economics of building rental homes is different from building homes for sale, and therefore requires a different approach. |
| Vernon foresees such policy changes enabling more PRS homes, including some at discounted market rent levels, to “be unleashed to meet the wide range of needs of those on middle incomes.” He’d like this new generation of properties to be “available to a wide spectrum of local people” and “entirely integrated in tenure-blind mixed neighbourhoods.” | Vernon foresees such policy changes enabling more PRS homes, including some at discounted market rent levels, to “be unleashed to meet the wide range of needs of those on middle incomes.” He’d like this new generation of properties to be “available to a wide spectrum of local people” and “entirely integrated in tenure-blind mixed neighbourhoods.” |
| His suggestion for “a London-wide policy framework” for build-to-rent involves a requirement for developers to include a fixed percentage of discounted market rent homes in new developments - “a London-wide tariff” - and their commitment to keeping these properties available for rent “for a minimum number of years” with, possibly, a standard length lease term. Boroughs and developers would each have an input into the detail of schemes to make sure the right numbers of homes were supplied at the right discounts to meet local need without putting investors off. All of this would be part of “a new narrative and policy on what constitutes affordable housing.” | His suggestion for “a London-wide policy framework” for build-to-rent involves a requirement for developers to include a fixed percentage of discounted market rent homes in new developments - “a London-wide tariff” - and their commitment to keeping these properties available for rent “for a minimum number of years” with, possibly, a standard length lease term. Boroughs and developers would each have an input into the detail of schemes to make sure the right numbers of homes were supplied at the right discounts to meet local need without putting investors off. All of this would be part of “a new narrative and policy on what constitutes affordable housing.” |
| This was interesting and not out of step with some of the policy positions being taken by mayoral candidates. There is, for example, a decidedly “muscular, interventionist” tone to Labour’s Sadiq Khan’s talk of the Home for Londoners unit he wants to set up in City Hall, while his proposal for a new London Living Rent tenure with rent levels linked to local average incomes seems, at first glance, potentially compatible with Vernon’s localised discounted PRS homes. Conservative Zac Goldsmith has been stressing his wish to see a mix of housing at a variety of below market price levels in all new developments. Vernon’s discounted PRS dwelllings would be consistent with that. Sian Berry of the Greens strongly favours development sites being split up for reasons much the same as those Vernon gives. | This was interesting and not out of step with some of the policy positions being taken by mayoral candidates. There is, for example, a decidedly “muscular, interventionist” tone to Labour’s Sadiq Khan’s talk of the Home for Londoners unit he wants to set up in City Hall, while his proposal for a new London Living Rent tenure with rent levels linked to local average incomes seems, at first glance, potentially compatible with Vernon’s localised discounted PRS homes. Conservative Zac Goldsmith has been stressing his wish to see a mix of housing at a variety of below market price levels in all new developments. Vernon’s discounted PRS dwelllings would be consistent with that. Sian Berry of the Greens strongly favours development sites being split up for reasons much the same as those Vernon gives. |
| The Grosvenor Estate man’s argument, which he’s also set out for City AM, won’t persuade everyone. Cynics might be forgiven for interpreting his prescription as a plea for the mayor and boroughs to help the likes of Grosvenor get their hands on lots of lovely land for more easily building rather classy dwellings only some of which would be cheaper than sky-high going market rates, and maybe not much cheaper at that. However, there are supply line advantages for a city that needs to vastly increase the number of homes it builds each year. Build-to-rent properties tend to be put together more quickly. Put bluntly, developers have an interest in dragging their feet over homes for sale because the more they dawdle, the higher the prices of those properties get. By contrast, the sooner they complete properties for rent, the sooner they can get tenants in and start making money. | The Grosvenor Estate man’s argument, which he’s also set out for City AM, won’t persuade everyone. Cynics might be forgiven for interpreting his prescription as a plea for the mayor and boroughs to help the likes of Grosvenor get their hands on lots of lovely land for more easily building rather classy dwellings only some of which would be cheaper than sky-high going market rates, and maybe not much cheaper at that. However, there are supply line advantages for a city that needs to vastly increase the number of homes it builds each year. Build-to-rent properties tend to be put together more quickly. Put bluntly, developers have an interest in dragging their feet over homes for sale because the more they dawdle, the higher the prices of those properties get. By contrast, the sooner they complete properties for rent, the sooner they can get tenants in and start making money. |
| Vernon, as you’ll have spotted, is entirely frank about the sorts of people his catalysed PRS would be for. “I believe the housing shortage in London puts at risk the capital’s greatest factor - it’s ability to attract and retain talent, both nationally and internationally.” He’s thinking largely of young professionals people and middle income families. For some, these groups should not be a top priority. Yet they are an essential part of London’s social and economic dynamic. What’s more, a larger, high quality PRS in London wouldn’t be either odd or alien. Two-thirds of New Yorkers are renters. In the early 1960s, 45% of London households were. Your wise comments on Vernon’s thoughts and and the future role of the PRS in London are entirely welcome below. | Vernon, as you’ll have spotted, is entirely frank about the sorts of people his catalysed PRS would be for. “I believe the housing shortage in London puts at risk the capital’s greatest factor - it’s ability to attract and retain talent, both nationally and internationally.” He’s thinking largely of young professionals people and middle income families. For some, these groups should not be a top priority. Yet they are an essential part of London’s social and economic dynamic. What’s more, a larger, high quality PRS in London wouldn’t be either odd or alien. Two-thirds of New Yorkers are renters. In the early 1960s, 45% of London households were. Your wise comments on Vernon’s thoughts and and the future role of the PRS in London are entirely welcome below. |