There is a vast amount of capital waiting to be invested in London housing, here’s how the British Property Federation’s Melanie Leech would unlock it…
London needs another housing boom. The late 19th century created the Victorian terraces of Zones two and three, the 1930’s ‘Metroland’ developments built much of today’s outer suburbs and the post-war council house boom filled in bomb sites and replaced older homes across the city. Today’s housing crisis demands a burst of building on a similar scale.
As this paper has rightly pointed out, since the 1980’s London’s population has grown by almost half, yet the number of homes has only risen by a third. This supply gap has contributed to historically high rents and made home ownership in London a minority tenure – 48 per cent (and falling) compared to 65 per cent nationally.
As we set out in our manifesto ‘Building our Future’, whoever wins power will need to make changes to the planning system to make sure it provides the clarity and consistency to deliver new homes and the critical infrastructure such as logistics that supports them across the country, including London, where need is arguably greatest.
To unlock development at pace we also need more planners – the major parties are committing to providing more resources and the British Property Federation’s (BPF) members have also consistently said that they would happily pay higher planning fees to get a system that delivers faster and more effectively.
We need to provide homes for people of all ages; families of all sizes and to cater for a wide range of budgets. The positive news is that there is a vast amount of capital available for investment in new London homes if we are smart about accessing it. This could unlock more build-to-rent (BtR) properties, housing for older people, student housing and affordable and social housing, addressing Londoners’ diverse needs.
BtR properties have emerged as a vital component of London’s housing supply with almost 50,000 new homes completed. Unlike the traditional buy-to-let market, BtR developments are built at scale – specifically designed for renting and typically managed as a block by professional companies. Rents in BtR are broadly similar to the wider private rented sector but with long-term leases and predictable rental increases, tenants can enjoy greater security and easier financial planning. BtR offers numerous other advantages, including well-maintained facilities and communal spaces and on-site services such as 24-hour security and concierge services. Professional management ensures consistent quality and maintenance.
With the right policy and planning framework, the BPF predicts that we can double annual BtR output to 30,000 homes across the UK, boosting choice and quality for Londoners.
Investing in purpose-built student accommodation (PBSA) is also essential in a city with so many globally renowned higher education institutions. High-quality accommodation is an increasingly important part of the offer to students and post-graduates – it enhances the overall student experience, offering safe, comfortable and conducive environments for studying and living. PBSA can help alleviate the pressure on the wider rental market, freeing up homes for others to live in.
One of the most significant developments in recent years has been the growth of private sector capital invested in our pensions and savings, seeking to invest in social housing, boosting supply either directly through development activity, or indirectly through acquisition of existing assets. Partnerships between the not-for-profit and the for-profit sectors are emerging, with a shared ambition to deliver quality, sustainable investment in this sector. With the right framework, billions of pounds more of new money could be unlocked for social housing.
The BPF’s manifesto sets out the property industry’s offer to the next Government to unlock investment into our built environment – to build the homes, critical logistics infrastructure, workspaces and leisure destinations London and the country needs. The BPF’s members want to play their part in the city’s fourth great housing boom of the last 150 years. Further, we are offering the new government an opportunity to work with us to unlock new investment, power London’s economy, build new homes, and maintain London’s pre-eminent status on the world stage.
Melanie Leech is chief executive of the British Property Federation