London Housing Company: A proposal from the LDA

1. London Housing Company:A proposal from the LDA

2. Credit Crunch & Recession: Impact on new build housing

3. The imperative for intervention: stalled regeneration

4. The imperative for intervention: London’s offer

5. The imperative for intervention: household growth

6. A need for new business models Average deposit of London first time buyers = £32,500 Equivalent for average property = £45,500, plus £10,500 in stamp duty. CML June 2008 Buy-to-let gross advances totalled £2.1 billion in the first quarter, down from £4.0 billion in the fourth quarter and £9.5 billion in the first quarter of last year. CML Aug 2009

7. Sources of housing investment falling

8. House price falls reduces incentives to build Source: Communities and Local Government: House Prices Index August 2009

9. But long term private rental returns can offer a stimulus to build Whilst rental yields have softened during 2009, due to increase in properties being made available, they could form part of stimulating a new private build solution. Source: GLA rent bulletins and unpublished surveys

10. Long-term expectations are for house price increases in London Source: Experian Business Strategies

11. Is there a business case? • HCA PRSI initiative indicates institutional investors are interested • Institutional long term investment expectations c.5% • But current residential rental yields average c.4% How can we bridge the gap through new build for private rent? • Deferring public land receipts via equity stakes • Reduce costs of development finance by borrowing at scale • Innovative procurement to reduce construction costs • Maximising the income stream via services & greener homes • Creating development certainty by enabling the planning system • Open book valuation to build trust & speed the process • Minimise voids – provide rental stream security

12. A London Housing Company LHC Governance Board Pension funds & other institutional investors Development finance securitised against a public land portfolio Public land & schemes and support for development. Assurance on voids Investment Management Public body sponsorship LAs, HCA, LDA & others Open book developer margin Open book rental return (5%+ net yield) Property Management Panel Development Panel Developers & RSLs RSLs & new entrants

13. An offer from the LDA • Pool LDA land with boroughs to achieve economies of scale • Fund much of the start up costs • Work collaboratively with the HCA • Explore the appropriate measures to assure investors • Extract value from high quality design & services • Construction training & employment

14. Available Public Sector Land Source: LDA – London Brownfield Sites Review (Public sector land suitable for housing)

15. Available Public Sector Land Source: LDA – London Brownfield Sites Review (Public sector land suitable for housing)

16. Available Public Sector Land Source: LDA – London Brownfield Sites Review (Public sector land suitable for housing)

17. Potential Housing Land Capacity