Despite London’s status as a safe haven for investors, for many living on crumbling housing estates it’s anything but. For decades politicians have ignored the link between poor housing are various social ills. While Tony Blair did much to help cities, he did little for housing.
Today’s plans to redevelop sink estates by harvesting institutional capital should therefore be universally welcomed. The £140m of proposed cash won’t even scratch the surface. But the key to this will be having the right structures in place to attract pension funds.
Institutions have stayed away from residential property for over a generation. But poor performance of traditional investments – like bonds and equities – have made them look twice at property. Over the last year, London has seen a boom in Build to Rent – the development of US-style rental clusters funded by long-term investors. The money is waiting.
However, a critical element in renewing existing estates will be the rights of residents to return. As I have written about before, such regeneration projects often fail to replace social housing in like-for-like numbers. Residents need not only have the right to return but must be able to afford it. It’s crucial we don’t stamp out the social fabric that keeps London alive. We must demand the same proportions of affordable housing without poor doors separating people in posh pads.
Already, many Build to Rent developers are finding ways to mix affordable and market rent housing. In Greenwich, Essential Living, the UK’s first developer and operator of homes for rent, won planning consent for 249 homes for rent. A quarter of them will be for discount market rent - between 55 per cent and 75 per cent of market value. They will be “pepper-potted” within the scheme.
The Creekside Wharf project won the Sunday Times Homes awards for Best Housing Project and was lauded by the Labour council for being “innovative” and “community-focused”.
Essential Living’s proposals for a major 500 home regeneration scheme in west London at the Perfume Factory, part of the Old Oak Common regeneration zone, will be considered by Ealing Council next month with a similar offering of discount market rent homes.
As the report I authored last August (Funding Britain’s Rental Revolution) showed, major investors like Grainger, Greystar, Legal & General, M&G Real Estate and Hermes Investment Management are queuing up to come into the sector. Around £50bn is now on the table.
To ensure this is spent in Britain, we have to see greater focus on Build to Rent from Number 10. Attracting the kind of investment David Cameron seeks will require a solid mix of income-producing investment and traditional housing for sale. It is also vital they bring new faces onto their advisory panels rather than relying on the same old housebuilders.
In Michael Heseltine, the man who oversaw the regeneration of London’s docks in the 1980s, there’s nobody better-placed to manage this process. Let’s just hope he’s looking forwards and outwards at the solutions which are largely already in front of us.