Blog: 12 October 2017Build to Rent Coming of Age?

Bob McCurry

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Bob McCurry

Planning Director

London office

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Cast your mind back a few years, when the Government first started pushing the importance and need for delivery of affordable homes nationally, across all sites. In the beginning, this approach was rough and ready, only over time becoming more and more refined as we all built our understanding, tested approaches and their resultant impacts, and steadily began to build policy approaches at a local level.

Political desire and ambition increased as different local authorities took more progressive approaches to what they wanted to achieve. Today, affordable housing is a social policy, some may even say a tax, enshrined in planning. Some Local Authorities remain more aggressive (or ambitious depending upon your viewpoint) than others, but there is a core level of delivery and control that is understood, if not agreed by us all.

Standing back from this process it feels as though the Build to Rent (BtR) sector is on a very similar trajectory. We have spent the last 3-4 years building the case for it as a necessary response to the housing crisis. We have successfully proven that it is a sector that needs to be encouraged in order to tackle the UK’s housing crisis. That it would combat rogue landlords, and provide flexibility and diversity in our housing offer. Plus, it would increase the rate of delivery, viability and place making. We have therefore successfully climbed and conquered ‘Stage 1’ of the process - acceptance.

Stage 2 in the affordable housing implementation process was the embedding of policy within Government and Local Authority. In the BtR sector we are already starting to see GLA Guidance and a number of Local Authorities respond, with BtR being a key promoted element of the mix within large scale regeneration schemes, alongside affordable housing. All good stuff, but alongside this I know of at least one LA seeking to extend control over the terms of letting and management, through the s106, to address the issues arising from individual private landlords and tie in management through the BtR operator or Registered Provider.

 

 

The risk is that in having generated acceptance and understanding of the benefits, Councils will now seek control over the operation of the product to further widen social housing policy objectives, and much like affordable housing, this is likely to be widely variable probably depending upon political ambitions and approach.  At Barking for example, restrictions have been placed on the private sale of multiple units to one person. This policy is designed to drive out rogue landlords, so is no bad thing, but it is control. One of the buildings in Creekside Wharf, Greenwich (a case study in the Housing White paper) is allocated solely for ‘family’ renters at 55-75% of open market value, with the Council’s ‘deferred’ affordable housing contribution, just prior to the end of the 15-year covenant, shows how far we’ve come in respect of balancing delivery and affordable provision.

This growing control from Local Authorities could be a major challenge for BtR operators who are looking to focus on specific sectors of the market, be that co-living, families, later living or affordable. Intervention through planning policy such as the London Plan is already evident as it specifically highlights that Local Plan preparation should ensure ‘the planning system provides positive and practical support to sustain the contribution of the BtR sector in addressing housing needs and increasing housing delivery’.

I believe this means the BtR sector needs to now act, if we are to proactively engage and inform the formulation of detailed policy at the local level. Now is not the time to stick our heads in the sand regarding how BtR is embedded in policy. Considering how we can offer Local Authorities certainty and policy terms that suit our model but equally answer their concerns is vital. We need to be capturing in planning terms the benefits we are going to deliver and demonstrating how this can be secured in a manner that is compatible with commercial reality. Otherwise Councils will fill the gap as they think fit.

The support for BtR is derived from a range of factors, not least social cohesion and addressing concerns of young couples with families as to the ability to remain in a local area (for reasons of school catchments and other none planning matters). We need to be clear as to if and how we can deliver and capture these benefits, and we cannot be na├»ve about our approach to the ‘Right to Renew’, lease lengths, space standards, units per core, management approaches, etc.

Going forwards, we must engage in the detail with councils through their policies, and only then can we help them get us to ‘Stage 3’ of the process. If ‘Stage 1’ is acceptance, ‘Stage 2’ is over control. Stage 3 is rationalisation. 

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