With a capital city and metropolitan area as large as London (some 9 million people and around 1,589 sq km), the administration and management of policy and community services across some 32 local authority areas is, clearly, quite a challenge.
The Greater London Authority (“GLA”) is the top-tier administrative body responsible for the strategic administration of Greater London. It was created some 20 years ago and is headed by a directly elected Mayor and 25 members in a London Assembly, elected on a four-year cycle.
Amongst other things, the GLA is tasked with the responsibility for co-ordinating land use planning in Greater London for the greater good of the wider community. The Mayor’s office produces a strategic plan, the “London Plan”, and the GLA has powers of scrutiny, refusal or approval. The 32 individual London Borough councils are legally bound to comply with the Plan and the Mayor has the power to override planning decisions made by the London Boroughs if they are believed to be against the interests of London as a whole.
Rental market in London
Given the almost continuous growth in London’s population and the fact that much of the housing stock is from the early 20th century, London faces a perennial, acute shortage in quality properties to rent. This has been highlighted repeatedly by a number of pressure groups over the years and is especially problematic for people in the “affordable rent” category.
Of course, the GLA is acutely aware of the shortage in homes to rent and in the current draft version of the London Plan) the Mayor has set a target of 65,000 new homes a year over the next ten years, almost double the previous targets. Indeed, the UK Government has long sought to create a new corporate private rented sector to supplement and eventually replace smaller landlords who own one or two properties and who dominate the rental sector.
It has been regularly argued that the UK needs real alternatives to home ownership and social renting, and that the labour market will benefit from greater availability of good quality, readily accessible and flexible rented housing.
Accordingly, BtR projects would appear to fit the bill perfectly, especially as previous government’s policies designed to encourage the sector (including the Business Expansion Scheme, Housing Investment Trusts and Real Estate Investment Trusts) in the early 2000s had little effect.
BtR projects in London: the theory
The growth of BtR projects in London has continued rapidly. More and more boroughs are seeing interest from BtR developers in their area. It is reported that there are currently some 10,500 completed BtR to rent homes, 9,500 under construction and around 28,000 with planning permission.
BtR schemes, constructed or in the pipeline, are distributed across London, including the outer boroughs. In West London there are schemes in Hayes, West Drayton and Uxbridge; in East London a number of schemes in and around Barking town centre; in South London, Croydon; in North London, there are schemes in Colindale and Wembley; and in Central London, there are schemes in Victoria and Elephant and Castle.
However, as the expansion of BtR in London is in its (relatively) early stage, most boroughs do not yet have specific BtR housing or planning policies or will be at the early stages of developing them. In theory, the Mayor’s Affordable Housing and Viability Supplementary Planning Guidance (SPG) helps to fill this gap by providing London-wide guidance and support aiming to set out a “new pathway” for BtR.
BtR projects in London: in practice
Whilst policy statements and intentions indicate that the GLA and the Mayor strongly support growth in the BtR sector the reality is apparently slightly different.
Naturally you’d foresee some administrative difficulties and political differences to get in the way, but it might be expected that GLA could help resolve such problems.
Although the figures are from some 17 months ago, at Q4 2019, 9 BtR schemes remain in the planning pipeline having initially been refused permission by the local planning authority, a total of some 2,000 homes.
The most common ground for refusal was a negative impact on the character or conservation of the local area, with 70% of schemes being given this reason. The next most common reasons were overdevelopment and issues relating to affordable housing provision or other section 106 contributions.
Since 2017, the number of BtR unit starts in London has remained reasonably consistent, fluctuating between about 5,500 and about 8,100 starts per annum. Roughly speaking, therefore, refusals account for some 25-40% of BtR starts.
Given that the target as stated above is some 65,000 homes per year over 10 years and that it is widely recognised that the number of quality rentals need to be enlarged, these figures don’t really appear to make inroads into the housing rental shortage problem.
Yes, several boroughs have introduced, or are in the process of introducing, policies to support BtR. One example is Camden’s draft Local Plan (2015) which specifically supports the development of private rented homes where this will assist in the creation of mixed, inclusive and sustainable communities.
But, again, it’s just the speed of creation and implementation of policies which appears to be hindering effective growth in the BtR sector… which leads to the following question:
Do the town planners really have a grasp of the BtR sector?
BtR schemes work best when the development pipeline (including planning) can be shortened. Delivering BtR units at scale and speed is necessary to start to generate rental income to make a return on investment. This means there is a strong incentive to implement a planning permission and to start building at pace. The model supports the acceleration of construction on large (phased) sites so that BtR developments can also be delivered simultaneously with other housing tenures, even though BtR is aiming at different sectors of the residential market.
But do planners understand and accept BtR as a way of improving the housing shortage? And more to the point, do the approval processes in place, coupled with the need to refer BtR schemes to GLA permit such requirements of speed and scale to be met?
Last thoughts
London needs housing, especially new quality rentals, and BtR can provide that housing. But to effectively work towards meeting targets and alleviating supply issues, BtR and the housing sector as a whole need the buy-in from government at all levels.
There is little point in high-level government policies setting ambitious housing targets if the local planners on the ground are slowing progress, or the administration at the top (the GLA) are too slow in issuing approvals, or worse still, consistently refusing schemes!
Somehow, some way the processes need to be streamlined to enable BtR to deliver on its potential in London.
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