THE Mayor of London owns 530 hectares of land and is the largest public landowner in London. He is responsible, with the London Boroughs, for addressing the needs of the 350,000 Londoners on the housing waiting list, for planning for the future housing needs for the capital, and for a budget of around £3bn to spend on housing development up to 2015.
Additionally, Boris has activated new powers, available to him under the Localism Act 2011, to take control of the Olympics legacy directly – through a new Mayor’s development agency (the London Legacy Development Corporation), which, from October, will have impressive planning powers.
As Bicycling Boris gives way to Builder Boris in his second term, the Mayor will have an opportunity to deliver bottom-line growth figures and to kick-start the economic recovery in London. Housing development is important for the economy – about 1 per cent is added to GDP for every 100,000 homes built.
Previous recessionary periods have resulted in an added impetus to building houses, delivered in different ways and in accord with that time. As a thumbnail summary, after the 1930s, Britain saw a huge contribution from the building societies movement, following the 1948 Olympics there was a substantial local authority housebuilding phase, and the late 1980s and early 1990s recession saw dramatic growth in the contribution made by the housing association movement, which continues today. It is private housebuilding, not social housing, which has fallen behind since the credit crunch – to levels last seen in the 1950s. By contrast, local authority and housing association completions are at the strongest levels since 1995.
The Olympic Park site, with its 11,000 homes, will inevitably be a focal point for housing development. With so much already invested into it, it must be hoped that the legacy site can be self-funding and not absorb social housing grants that could be applied elsewhere.
There are now a number of tried and tested models for large-scale developments without social housing grants. New housing sites and additional affordable housing could be brought forward using a successful social housing enterprise approach – pioneered in Ely Bridge alongside the Welsh Government. Other good models to explore would be the Rettie-Resonance model which has been successfully delivered in Scotland, and the Barking & Dagenham/Laing O’Rourke lease structure. These types of models have had to explore and resolve many common problems that can significantly delay a project before housebuilding starts. These can include issues around state aid, public procurement, and the balance of planning contributions and responsibilities.
The lack of mortgage availability continues to hamper development activity, as developers are nervous of building homes which may not get sold to first time buyers. While institutional rental portfolios are certainly part of the equation, there are new solutions that can allow first time buyers to purchase their home gradually, without the need for separate mortgage finance. The Genie, developed by Gentoo Group, is a stunning example of how you can help young people into responsible home ownership, and it is thriving in the North East. The Mill Group’s co-ownership structure is another approach to the first time buyer/ shared ownership segment which has secured institutional investment backing. Alternative ownership solutions could be showcased within the Olympic village portfolio and on other publicly owned sites.
Builder Boris also needs to consider the mix of housing to be brought forward in London. There is a longstanding need for affordable family housing in London. The focus on building smaller one and two bed homes over the last decade has left an overcrowding issue which is pronounced in parts of the capital. Rather than relaxing or reducing affordable housing targets, this is an opportunity to build quality affordable family homes for Londoners.
No doubt the Mayor will continue to bang the drum for additional infrastructure investment into London – as is his job. He has called for the right to deal with housing in London. Now he has not just the responsibility – but also the opportunity – to light the London housebuilding growth torch.
Natalie Elphicke is a partner at Stephenson Harwood.