The UK does not have enough homes – especially in the capital. This is a concern persistently raised by our members and felt the country over. Indeed, there is a real fear that our thriving cities – and London is the key example – will start to suffer as access to housing, or lack of it, spirals out of control, and talented residents move elsewhere.
Some companies have started to address this problem by devising innovative schemes to help employees find quality accommodation within their budget in London.
A few weeks ago, Deloitte revealed that it has reserved 40 rented flats in the former Athlete’s Village in Stratford for new graduates. This was swiftly followed by Starbucks saying it will help its employees with the deposits for a rented home, which is something Shelter and the CBI have been excellently promoting.
Particularly interesting with Deloitte’s announcement was that the flats in question are not for sale, but for rent. Professionally managed by Get Living London, these flats offer security and peace of mind for those starting their new job.
And this is part of the reason why we believe that the Build-to-Rent (BTR) sector has the potential to really boost London’s housing supply and help to retain talented employees. There are now 18,000 BTR homes in the capital’s development pipeline, and the mayor of London has pledged to deliver 5,000 units per year.
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In response to this demand, a number of developers are putting up purpose-built rental units, many of which offer an on-site manager, long-term tenancies and shared amenities, such as communal gardens and function rooms.
Both the mayor and the government have supported this sector, seeing the potential to channel as much as £30bn of pension fund investment into delivering new homes. And government has helped the sector by liberalising planning policy.
Permitted development rights, which allow developers to convert offices into homes without full planning permission, will end in April 2016.
But Whitehall is currently contemplating extending the policy, which we would herald as a good move – it is a useful tool for breathing life into under-used buildings and contributing to housing supply.
Understandably, commercial hubs such as the City and Westminster are concerned that this policy impacts negatively upon their ability to retain much-needed office space. So councils must be able to apply for exemptions for strategically important areas.
There has been speculation as to whether an extension might make it mandatory to include a provision of Starter Homes in a given scheme. There is some logic in making this a requirement on a development where homes are for sale, and therefore bringing some of those within the reach of first-time buyers. On a rented development, however, this is more difficult.
No institution will want to invest in a broken block, where they do not have full control over all the units and cannot provide quality-assurance management and services. Seamless management is part of what makes BTR special – and different from a block owned by a multitude of buy-to-let investors.
A sensible way forward would be for the government to provide an exemption from the Starter Home requirement for those that want to deliver BTR. That way, institutional money can continue to find its way into such projects, more employers are able to help London’s employees rent, and we can keep the range of skills and talent our capital city needs to function.