London has undergone a ‘seismic shift’ in its build to rent sector but must still work hard to lose its ‘obsession’ with home ownership if it is to make a dent in numbers toward housing its growing population.
That was one of the key messages to emerge from a half-day conference on delivering more homes at the NLA yesterday, kicked off by deputy mayor for housing and residential development, James Murray.
Private renting, said Murray, is an important part of the overall supply picture in the capital, and there had been a ‘seismic shift’ in the sector, going from 11% five years ago to 28% today and projected to grow to 40% of the total by 2040. The last 20 years represented an economic and jobs success but a housing failure, Murray added, so the GLA was working hard to prioritise and set out clear support for build to rent and give councils a ‘steer’ in new tenure, appreciating the distinct economics involved while undertaking viability assessments on affordable.
Mayor Sadiq Khan will shortly be publishing a publicly accessible ‘name and shame’ database on rogue landlords, said Murray, and it was important to develop build to rent ‘the right way for London’, with genuinely affordable schemes part of that picture. ‘It’s very easy to say this is the answer’, he said. ‘It is part of the answer, and it is a big part of the answer. It has a vital role to play.’
Mark Williams, interim managing director at Hera Property Management Services showed how Swan is developing a new factory in Basildon to meet demand in this area, with a target of producing up to 400 homes a year at schemes like Beechwood or Laindon Shopping Centre in Essex. Offsite could mean 50% quicker builds with reduced defects and 10% cheaper than traditional methods, he added, without compromising on quality. Knight Frank’s head of residential capital markets James Mannix, meanwhile, said investors were keen to make inroads in the UK, with this market for ‘multihousing’ set to treble in size over the next five years.
Investors were being attracted to its long term-secure income potential. But, contrary to popular opinion, the biggest area of growth for build to rent will likely be in the 35-64 year old demographic, rather than the millennials. ‘This is where the story is at for the next 10 years’, said Mannix. There has been a ‘massive’ amount of money coming into the market to cater for a ‘fundamental shift’ in the way people live, Mannix added. Around one in five people will be renting by the year 2022, he said.
Grosvenor’s executive director Simon Harding-Roots is another believer in build to rent to provide homes for Londoners and support its growth, creating homes that people actually live in rather than use as a bank in which to park money. Build to rent schemes are easier to integrate into existing communities, he said, but we need to get rid of the owner occupation ‘obsession’ in the UK, perhaps learning from what Europe has done for many years. The sector will also be aided by a new focus in the next London Plan, said GLA’s head of the London Plan Jennifer Peters, who revealed that the draft of the new document will be published on 29 November.
The conference also heard from CallisonRTKL director John Badman, who compared the UK to the US model, where an ‘amenities arms race’ was still raging, and Greystar’s James Pargeter, who believes that the ‘Holy Grail of tenure blindness is almost upon us.’ Pargeter showed his firm’s Greenford Green project on the former Glaxo site, while Quintain strategic finance and investment director Catherine Webster detailed how its £1bn investment in Wembley Park will rise to £3bn in predominantly build to rent schemes.
Woods Bagot associate principal Simon Saint said he and colleagues were seeing the ‘death of the first time buyer’ and birth of the ‘last time renter’, with older people wanting to return to the city centre, where the action is. Finally, AKTII director Rob Partridge showed how research based design had helped it create a tower and eight storey terrace block in Elephant and Castle after the market forced it to go from for sale units to rent, installing accelerometers to measure sway and feed back infomration into future schemes.
Ultimately, though, said Broadway Malyan director Peter Vaughan, it was ‘absolutely disgraceful’ that there is no proactive agenda for local authorities on build to rent, with 55% not engaged, policy-wise, and there needs to be more flexibility over unit sizes. But there was hope, too. ‘There has been a paradigm shift’, said Vaughan. ‘Rental is the future’.
Editor, New London Quarterly