Accelerating Housing Development in London Findings and Recommendations

Accelerating Housing Development in LondonFindings and Recommendations Nancy Holman, Kath Scanlon and Christine Whitehead LSE London 23 June 2016 LSE

The Goal: 50,000 homes—more than double 2015/16 completions The Question What should be done now---and in the longer term---to make that happen?

Why is London different? • Demand: • demographics • transport • range of available jobs • economic growth • Supply: • flexible housing stock but • very expensive land, most of which is brownfield

…and further • Size of social - market rent gap • Shortage of intermediate and cheap housing • Rental housing makes sense for more people than in the rest of the country • Complex governance – 33 boroughs + GLA

Opportunities • New mayor • Political goodwill • Better incentives for local authorities to allow development • Possible changes in CPO powers

What should we be looking at?1) Planning certainty • Current system is costly, risky, time-consuming and encourages gaming • ‘Viability’ rules make affordable housing harder to achieve

What could be done? • A tariff would certainty and speed but provide less affordable housing on high-value sites • At minimum we need • transparency of viability calculations • more expertise in local authorities and • incentives for developers to accept reasonable affordable-housing contributions

But most importantly • The capacity to re-visit agreements through the viability policy should be revoked

What should we be looking at?2) Housing Zones • Currently 31, covering historically problematic areas • Goal: 77,000 homes, 1/3 affordable • Stakeholders jointly focus on well- defined ends • Identified pinch points • Real (though small) money available • But no changes in planning powers

What could be done? • Zones are promising BUT we should not dilute the concept – not helpful to do too many at the same time • Make the current set work before adding more designations.

What should we be looking at?3) Large sites The contribution of large sites in London, 2009-14 • In 8 boroughs it would take 250 years to build these sites out at current rates

…and small sites • Numbers of small builders in London have fallen massively…and continue to fall • Hard for them to play a role on large sites • Difficult to find appropriate small sites • Problems with finance and costs of planning permission

What could be done? On large sites • Increase number of developers and types of unit on each site On small sites • Better access to public/infill sites via • dedicated GLA support team • dissemination of good practice • standardisation of planning/legal processes

…and also • Encourage different types of housing • custom build • modern methods of construction • community-led models • niche markets

What should we be looking at?4) Purpose-built PRS housing • Big advantage: speed • 3,500 completed in London and15,000 in the pipeline • Most investors require subsidy or guarantees. Long-term commitment? • Rents generally high, and little contribution of genuinely affordable housing

What could be done? • Some investors would provide discounted market-rent units if they could retain ownership but LAs uncertain • Established corporate landlords should be permitted to control and manage affordable units • HAs and local authorities should be encouraged to take larger role in market housing

What should we be looking at?5) National policies and London reality • National policy: owner-occupation – doesn’t work in large parts of London • Housing & Planning Act will reduce quantum of affordable housing in London • Boroughs hemmed in by rules on spending RTB receipts and housing homeless

What could be done? • Central government: • encourage a flexible London-wide approach to housing targets, including more focus on rental • Boroughs/GLA/central government: • agree a way to use RTB receipts and apply modified Starter-Homes provisions on a London-wide basis

…and importantly • Everyone: • Recognise that deal making is possible—and necessary

Final observations • 50,000 units is a massive challenge • High % affordable: even more challenging • Trajectory has been generally good excepton affordability • Governance a major issue – and devolution may be more difficult in London than in other cities • Need a coherent programme of change

Conclusions • The Mayor’s next London Plan must deal decisively with the housing issue (and much else) • Trade-offs, deals, simplification and transparency are key • Our recommendations are a start but on their own not enough….

Recap: our recommendations • Greater planning transparency, more expertise in local authorities and incentives for more affordable housing • Get rid of the viability rules • Make existing Housing Zones work • Get more developers on big sites and make more public land available to small builders • Let major corporate landlords manage affordable units • Adopt London-wide approach to RTB receipts and Starter Homes provisions • Make deals

Accelerating Housing Development in London Findings and Recommendations