London’s Mayor and civic leaders must expand a narrative on affordable housing

On 22 February 2017, Craig McWilliam, CEO of Grosvenor Britain & Ireland (GBI) gave the keynote speech to industry and public sector figures at the PRS property summit organised by London First and Movers & Shakers. 

 

24th February 2017

On 22 February 2017, Craig McWilliam, Chief Executive, Grosvenor Britain & Ireland, gave the keynote speech to the London PRS Forum. He outlined his view on the challenges facing civic leaders in unleashing high quality rental homes at scale across the capital.

You can read a transcript of his speech below.

"London’s greatest success factor is its ability to attract and retain talent - nationally and internationally.

Key to attracting that talent will be great places that are both dense and liveable.

  • Urban neighbourhoods with rich histories that offer a unique lifestyle - home to people of mixed incomes, backgrounds, life stages and jobs; and
  • Commercial districts that host employment and greater opportunities.

It is a profound challenge to create and manage such places in London.

Meeting that challenge will require closer and more creative collaboration between government and the real estate industry. But bold public sector leadership must be the starting point for success.

Our civic leaders should be judged on the quality of the places their policies create.

Good place-based policy and placemaking leadership

  • That avoids the binary debate of growth versus Nimbyism;
  • That brings an honest discussion of the trade-offs.

I believe the housing shortage presents the capital with perhaps its greatest opportunity for placemaking leadership.

We need to double the supply of new homes…

  • But with a response judged not only by the number of units, but also by the quality of the mixed urban neighbourhoods that we create.

---

Is the build to rent sector helping to create these great, urban neighbourhoods? And what potential does it have to do so at scale…

  • With high quality homes delivered, owned and managed by investors for the long term?

I would argue the evidence and the trends on investment are just not yet strong enough.

In London a quarter of the population rents in the private sector; while the UK has more than £1tn of private rented stock.

  • But only 2% of it this stock is owned by investors who hold 10 or more properties; and too often, landlords are insufficiently capitalised or organised to deliver a high quality service.

According to the British Property Federation, there is around £30bn of private capital looking to invest in the UK’s private rented sector over the next five years.

  • But the average supply of rental homes over each of the last five years was less than a third of the Mayor’s target.

There have been some recent eye-catching announcements - from Quintain, Greystar, Grainger, Legal & General and Invesco Real Estate amongst others. And we at Grosvenor are planning a “build to rent” development of over 1,500 homes in south east London.

  • But taken together they fall well short of what the city needs - and a long way short of what has been achieved across neighbourhoods in other cities.

The sector is making progress. There are Londoners living in build to rent homes - and there will be more. But we need to work harder to unlock the institutional investment that could deliver many more new homes.

  • Designed to be rented with inclusive, high quality amenities;
  • Supporting large-scale neighbourhoods professionally managed by a single landlord;
  • Accessible and available to a larger cross section of society than homes for sale.

---

So what is needed to unlock this potential in the capital? Many things - but let me very briefly prioritise three.

First, we need a clear and unambiguous London-wide policy to unleash the Build to Rent sector…

...To unlock a vital new source of supply at scale.

At present, build to rent investors and developers just don’t know where they stand in London. This ambiguity creates a stand-off that slows and prevents investment. We have, with others, called for policy to end this stand-off.

So we welcome the Mayor’s recent efforts to bring that clarity for Build to Rent…

  • His recognition that unlocking this supply of new homes requires new, dedicated policy support.

Civic leaders will need to socialise this proposition…  

  • And test its public acceptability

And they will need to advocate the benefits of Build to Rent and the policy change needed to realise them.

Second, and in parallel, we need a new public narrative on what constitutes affordable housing.

As we know, the housing shortage in London too often leads to diverging outcomes

  • With housing available to the few who can afford to buy it, and the few who are allocated social rented accommodation.

New rental homes can meet the needs of those locked out on low and middle incomes…

  • Market and discounted market rental homes accessible to the many, not just to the few.

Now, the Mayor recognises the economics of Build to Rent are different to those of housing for sale…

  • …That Build to Rent development can’t deliver the same percentage of traditional affordable or social rented homes as housing for sale.

So his emerging policy guidance argues discounted market rental homes should be viewed by planning policy as traditional affordable housing. This is positive and bold. But to be successful this policy will need a new public narrative about Build to Rent…

  • That increased supply through Build to Rent is a good thing;
  • But that Build to Rent development itself may not be able to provide as much for those who need social housing.

So we need a broader conversation about accessibility…

  • About the choices we face if we want net additional rental homes across the capital.

At the moment, we have a planning system that in my view fails too many on low and middle incomes.

So third, and therefore perhaps most critically, we need bold public sector leadership

The Mayor and civic leaders must instigate and expand this narrative on affordable housing. They should engage Londoners in the full set of choices at play. And in doing so they should avoid a false trade-off…

  • Between additional rental homes that meet the needs of the many; and
  • Traditional affordable or social rented homes that meet the requirements of the few.

The Mayor must give local authorities the political support they need to explore the full range of options they have to create great places. And civic leaders at all tiers of London government must demonstrate bold, growth-promoting leadership.

The prize it seems to me too great to ignore. Great, mixed urban neighbourhoods created and maintained with long-term investment...

  • Hosting homes of all tenures, with high quality rental and discounted rental homes owned and managed for the long term;
  • Knitting together local communities and expanding new ones;
  • Adapting to a generational shift in renting and changing demands on our lifestyles; and
  • Underpinned by bold, public sector placemaking leadership that comes with a compelling vision and an honest discussion of the trade-offs.

---

I have argued that to unleash the benefits of Build to Rent in London at scale we need new policy, a new narrative and bold civic leadership.

I look forward to hearing the debate unfold."

View all Grosvenor contacts