Changes to planning use classes, and a sensible review of the green belt, could both help encourage the development of new homes at prices real people can afford.
Those were the views of experts recently called to give evidence to the planning committee of the London Assembly at the end of June. Members also heard that London’s population is expected to continue to increase, with a further demand for more smaller homes as current households fragment.
“You have to split down the demand – there’s a substantial variation between demand and need,” said Liz Peace, former head of the British Property Federation. And a large part of those in need cannot afford to pay the prices being asked. She said one answer had to be build to rent, which is also one route to improve the pace of delivery.
“The way you can do it faster is if you look at build to rent….and I think focusing on ways of improving opportunities for those who do build to rent would be a very productive way of actually trying to increase the numbers of homes for those who can’t actually afford the sale values that are being asked.”
“I think PRS still needs more of a policy push,” she added, “and if you were to accept that this is a way to meeting a huge chunk of that need in London, which you can’t meet through the traditional route of build to sell, for lots of reasons, then build to rent could be given some seriously useful incentives via planning, to push down the price of the land – then you could see a step change and an increase in that.”
Committee chairman Nicky Gavron to lay out what those incentives might be. “The obvious one is a rental use class,” replied Peace, noting that the industry is split on this. “That actually then changes the whole way you calculate the price of the land. And that, certainly in the opinion of 50% of the investment community – and I’m with them – would actually make a difference, because that would actually change the yield that you get, and that would make it far more attractive to the institutional investors.”
Peace also expressed concern about setting targets for affordable housing, saying that could hit development progress. “It all depends what you paid for the land – no housebuilder is going to happily go forward with something that means he makes a loss against a figure that he’s paid for the land.” Targets could present significant difficulty for those already owning sites, she added: “You’d be asking large chunks of the private sector to take a bath on some of the sites they’ve already bought.”
Speaking for the housebuilders, Tony Pidgley of Berkeley said the public sector needed to rethink its approach. ” I think the public sector has to accept that best value needs to be lost, and we need to think about people’s wellbeing.” He noted that all his major regeneration sites are, generally, delivering 30-35% affordable. “I believe that works very well.”
“I don’t personally think the big challenge is land. I think housebuillders have got to become a force for good, and I think we ought to get on with it.” He added that a scheme in Stephenson Street in the east of London that his company will build would feature one third of the project as market rental units.
And he had a further suggestion: “We’d like to see a debate on the green belt – there are many, many sites out there that in 1947 somebody put a line round them, that are of no benefit to the community. Your children can’t play on them, your mother and father can’t walk on them – they’ve got barbed wire round them, concrete, they’re scrap yards – they should be reviewed, because we have a housing crisis and they could produce homes for people. And I think that we should be much more grown up about this.”
LPA Perspective: The direct, positive suggestions from Peace came after a frustrated assembly member Andrew Boff failed to gain any clarity on housing targets from the deputy mayor for housing, James Murray. Murray did, however, also commit to backing private rented development as a way to improve housing delivery.
Will Peace get her way, and see a new use class for rental homes? That could be one way to ensure more commitment into the sector, and she is not alone in supporting the idea. Fizzy Living’s Harry Downes has also publicly backed the idea of a rental use class, to help maintain the stock in the growing sector, but also to encourage longer term thinking about investment.
Pidgley’s call for a reconsideration of the green belt is probably a suggestion that will receive greater resistance. But he makes a sensible point, and with Maidenhead council buying up a golf course for housing development in its area, clearly there are situations where green space can be developed without causing great loss.