That moment in Lewisham is important. Both the emergence of homes being built for market rent, rather than sale, and housing associations entering that market are critical to boosting supply. The different market dynamics of private rent means it should sustain housebuilding even if the market cools and it can attract longer-term investors such as pension funds. The role of boroughs like Lewisham is also critical. If demand in the mid-market is to be met, we must not only broaden the range of products available but also the places where they are built. This is one of the purposes behind the new Housing Zone initiative, launched by the mayor and chancellor.
Typically just four of London’s 33 boroughs will see more than 1,000 homes start construction each year. The aim of Housing Zones is to stimulate significantly more housebuilding in areas of huge potential. Often these are well-connected town centres or former industrial land where values are lower and homes could be more affordable.
The Zone boosts housebuilding in three ways. First, it designates a substantial area, nominated by the borough, and puts in place a framework for focused engagement, with the mayor working with the borough, developers, transport bodies, utility firms – whoever – to make development happen. Next, it gives planning certainty, so that applications are determined within statutory guidelines rather than being unresolved for months, or even years. Finally, a £400m investment pot is tailored to the area, with funding often committed to essential infrastructure. So far the mayor has supported five bridges over road, rail and water, five station upgrades, and two civic centres being redeveloped for housing. Every intervention levers around £10bn of other finance.
This week two more Zones were designated by the mayor at Wembley and Waltham Forest, with £50m building almost 5,000 homes. So far over 2,000 hectares of land have been designated within 11 Zones. And to make sure these areas are desirable, the Zones offer “total regeneration”, with schools, libraries and retail part of the plans.
Here too the role of purpose-built rent is central to Housing Zones. In Waltham Forest, Legal & General has announced plans to develop purpose-built rented homes. And in Wembley, Quintain is one of the first developers to borrow from the London Housing Bank to build hundreds of homes for intermediate rent, as part of its ambitious regeneration plans around the stadium. The Housing Bank, alongside Housing Zones, is helping the industry accelerate the large multi-phase schemes that are the staple of the capital’s housing supply.
A more creative public-private partnership is essential if we’re to double housebuilding in the capital. The world of real estate was transformed by Canary Wharf, supported by an enterprise zone. It is time for Housing Zones to do the same for residential.