Transport for London is looking to the capital’s smaller developers and self builders, in a bid to get development of its surplus estate up to speed.
Despite having a framework of large scale development partners already in place, the organisation’s property director Lester Hampson said it would not be until early 2019 that the first residents would move in to homes that TfL are delivering. And, in a discussion with the London Assembly’s housing committee, he revealed the organisation is only just starting to get to grips with what promises to be a massive development programme.
The committee hearing came as two more sites, in Southwark and Clapham North, were brought forward for development alongside those already earmarked for a first tranche of schemes. Hampson said there were an initial 75 sites that had been identified: “They are our priority to deliver at scale and at pace.” Of these, he said 11 sites could deliver more than 200 homes, and three were large enough to accommodate more than 1,000 units each. The first site likely to actually start construction will be in Kidbrooke, south east London.
While TfL’s framework partners represent larger developers and housebuilders, there was much discussion of the potential for other actors. Committee chairman Andrew Boff quoted self build figures from around Europe, where self build accounts for 10% of homes in Berlin, 30% in Holland and up to 80% of homes in Austria.
“I come back to the Berlin soundbite,” said Hampson. “If 10% of housing is delivered through self build, imagine what that could do for London, if we can use part of our land to actually ignite self build in a community land trust and access the SMEs. We’re giving this quite a lot of thought – how can we best engage with the SME sector, because TfL is quite an opaque organization.” He talked of creating a “navigation map” for smaller builders and developers. “We’ve got to give this an enormous amount of thought. It needs a much more holistic approach.”
Committee member Tom Copley was supportive: “I think there’s a good opportunity here for TfL to help small and medium sized builders and community land trusts.”
And deputy mayor for housing James Murray added: “CLT and self build are clearly a different model of delivery which means you can get them to be genuinely additional supply, above and beyond what exists already. So if you think in the broader context, you might have some of these early, bigger sites being done by the people on the framework in a more traditional, classic way of delivering. But if we’re identifying this next round of sites which may be smaller, lower value areas, they can be taken on by smaller builders, or CLTs or self build organisations, the additional capacity that they bring won’t displace an existing activity, they will be genuinely additional.” He said he was looking at ways to encourage the smaller building and development companies: “The number of small builders has really dropped dramatically and their contribution to homebuilding has dropped dramatically too.”
TfL appears to have agreed a truce with the mayor over affordable housing. Having declared its property aspirations in a bid to maximise its financial returns, TfL then ran into problems with Sadiq Khan’s requirement to meet a 50% affordable housing target – which will reduce the returns from site sales. “We’ll deliver 50% across the programme,” promised Hampson, now referring to “twin objectives” of revenue generation and affordable housing provision. “We have to be able to bring more sites forward to balance the twin objectives. Our original objective was 10,000 homes over 10 years and £1.1bn of capital – now we’re accelerating that.”
“So you’ve had to bring more sites forward because the 50% affordable target has made that £1.1bn less achievable?” asked Andrew Boff. “It makes it a tougher target,” replied Hampson. “But do we think we’ve got the sites to do it, and do we think we’ve got the relationship with the GLA to do it? Yes, we do.”
Committee member Nicky Gavron noted that too many new homes are poorly finished today. “We’re building the retrofits of the future,” she speculated, and asked Hampson if he could commit to doing a better job on TfL sites. “The industry hasn’t been good at doing post-completion surveys,” he admitted, and TfL was engaging consultants to do just that on his projects. “If we’re building draughty homes, then we’re failing – and we shouldn’t be doing that. Energy poverty is something that is going to become an increasing concern as the price of energy increases. We have to get it right now.”
LPA Perspective: Hampson’s evidence revealed that TfL is only really getting started on the massive project it has set itself. While a framework of partners has been set up, there are potentially hundreds of sites to be scoped out. Many have adjacent opportunities and potential marriage value, though that sometimes means dealing with other unwieldy organisations such as Network Rail, and others could present opportunities from decking over stations. The scale is huge – but at least the job has been started.
Hampson also appears to be injecting some commercial discipline into an organisation that, reading between the lines, has been run by rail engineers for too long. Property assets appear to have been held onto, simply in case they might come in handy in the future. And there appears to have been no useful record made of these assets.
And he has some interesting ideas, committing to delivering high quality built assets, and harnessing smaller partners in some way to get sites going. He is also working with local authorities and ultimately hopes to share the TfL development expertise with other public bodies.
There is also the scope for a massive misjudgement here, too. Hampson and his major property partners appear to be working up projects that will be sold on 125 year leases – and while that does give TfL ultimate ownership, it returns little by way of ground rent in the meantime. Rental homes were only mentioned in passing, despite the massive appetite from investors and residents for this type of property. Surely a decent tranche of the TfL sites should be developed to deliver a regular income for the organisation, not simply a one-off capital receipt.
And why limit this exercise to TfL? Surely it’s time to bring a bit more rigour to the land owned by London’s 33 boroughs? Not to mention its health authorities and other utilities?