Michael Gove’s stark warning over the weekend that young people could “turn against democracy” if they can’t get housing is a painful reminder of how broken the market has become.
For two decades, home ownership has declined and renting has surged. Few have the money needed for a deposit in a market now dubbed an “inheritocracy”. It’s no surprise that one-in-three people rent in the private sector in London, but what’s shameful is how a quarter of these homes are “non-decent” – leaky, damp or in general disrepair.
In response, a growing number of “build-to-rent” developments – purpose-built clusters of apartments rented out by a single owner – have anchored key districts such as Wembley and Stratford. They range in price and facilities, but each one has on-site management which reduces many issues associated with absent or amateur landlords.
Many BTR developments - such as those owned by Legal & General, Grainger, Moorfield and M&G - are funded using pension fund capital.
We are a retailer with lots of brownfield real estate, which we are looking to put to good use. We have proposed plans to build rental homes above our Ealing and Bromley Waitrose stores (which would both be rebuilt) and in Reading on a disused warehouse site. This is about providing vital new housing for local communities we serve, while supporting our retail business. A partnership with investment company, abrdn, will help finance the plans.
As an employee-owned business we’re able to take a long term view on everything we do. Building around our stores will enable us to reinvest into our core retail businesses by strengthening our balance sheet and boosting the value of our property holdings.
Our proposed communities will include an array of greenery, social spaces and other community facilities. Residents will be encouraged to stay for as long as they wish - reducing transience and enabling everyone to put down roots locally.
We believe that via a few cost-free changes to planning policy, the country could unlock global investment to pay for the £250bn Savills believes is required to build the million rental homes we need by 2030.
There are three key things that could be done.
Firstly, to ensure that local councils are compelled to actually allow building on brownfield sites, as Mr Gove has proposed, we need concrete measures in place. Words don’t build homes. Creating brownfield development zones – areas with pre-determined planning consents - would solve this. They could prescribe the use - such as rental housing - and pre-agree design principles (such as height or density) to make it more likely that housing gets built quickly. Doing so would speed things up and dramatically attract more investment.
Secondly, we need clear local policies around build-to-rent. Right now, only six councils in London have build-to-rent explicitly referenced in planning policy, according to consultants Litchfields. While ’guidance’ exists nationally and in the Mayor’s London Plan, councils are free to ignore this and often bow to the demands of groups who oppose any kind of development. This was another point raised by Mr Gove on Tuesday.
Thirdly, local plans should mandate a minimum quota of build-to-rent housing and encourage higher density developments close to transport links. Tax payers have invested £19bn into the Elizabeth Line and building around its rail hubs will help drive usage, which makes environmental and commercial sense.
National guidance already exists around ‘discount market rent’ aimed at enabling swift agreements with councils around subsidised housing, but it is rarely followed. However, reducing friction could unlock tens of billions of pounds of funding and result in two key outcomes: more brownfield development, which all political parties support; and more key worker housing, which we desperately need.
London, more than any other UK city, has a housing crisis now throttling its growth. Home ownership should remain an option for everyone - but planning policy needs to move with the times. Politicians must recognise we are in the grip of a full-blown rental crisis. Only by unlocking investment for new supply will we change that. If political parties want to secure votes from millions of renters at the next general election, supporting build-to-rent should be front and centre of their manifestos.
Katherine Russell, is director of build-to-rent homes, John Lewis Partnership
