How Public land can provide for the current and future social and affordable housing needed in London

This briefing note is a follow up to the one produced pre Brexit on why the current funding model for housing development is failing to provide enough social or affordable housing in London in particular but in the UK as a whole.

Post Brexit all the talk from the major housebuilders, especially in London, has been about how market uncertainty is making it very difficult for them to commit to new schemes. The major housebuilders back up this position by stating that the new mayor’s aim to require 50% social or affordable housing on all new schemes in London makes such schemes unviable for them to develop as the financial model is not workable.

It is from this position, that the major housebuilders have made a plea for public bodies to make land in public ownership available to them so that they can continue to build and develop more housing in London. In return for this huge public subsidy, the major housebuilders will guarantee 30% affordable housing, and 20% private rented (PRS).

This whole proposal is a massive misrepresentation, as it will result in bumper profits for the house builders in the form of cheap land and will not result in genuine additional social or affordable housing for Londoners. In addition, the public land will be gone forever.  PRS is not social or affordable housing, the cost of rents in London have increased 20 fold since 2005. That is not by 20%, but 2,000% according to Bob Kerslake of the Peabody Trust.

If you want to provide genuine social and affordable housing then public land should be used for the provision of housing and the nomination rights of who can occupy this housing should be given to local authorities and housing associations. The land should not be sold or given to the private sector by way of a subsidy in the form of a reduced land price in order to accommodate the reduced anticipated profit they expect from the provision of additional social housing. This will only lead to a perpetual housing shortage and escalation in rents.

It would be a travesty if as is being proposed by some politicians and actively being encouraged by the major house builders, that public land be fast tracked to the private sector. The private sector has admitted that it is not good at, or in the business of, providing social or affordable housing. They should be left to do what they do best, which is catering to the private sector.

The way to utilise public land to provide social and affordable housing is by using the community trust partnership model of funding which is outlined below.

Community Trust Partnership Funding Model

It is clear, that to provide a sufficient number of new homes for both sale and rent at an affordable level means we need a new financial model. This is where the Community Trust Partnership (“CTP”) is just such a model. It is based on using institutional long term funding (25-35 years) to provide multi tenure housing in urban and metropolitan areas and is ideal for urban extensions, local authority regeneration projects and estate refurbishment and regeneration.

The CTP model brings in funding and the expertise to provide mass housing for first time buyers and renters. It allows for affordable rents for key workers such as, nurses, care workers, police, fire and ambulance staff, junior civil servants and local authority employees, trainees and apprentices. It also allows for appropriate and suitable retirement housing allowing people to downsize and help keep the housing chain moving.

There is little point in building new infrastructure such as schools, hospitals and other social infrastructure if the people needed to run these services cannot afford to live nearby or within a reasonable commute. One of the key factors behind an inability to retain key personnel such as nurses and care workers in the health sector and teachers in the education sector is that there is no affordable housing within a reasonable commute. Imagine how much easier schools and hospitals would find it to recruit and retain junior staff if they were guaranteed affordable housing in the area. 

This model opens up a whole new way for local authorities to look at regeneration schemes and projects. As an example where there is a major estate regeneration to be undertaken this is an ideal way to implement it. CTP does not need to allocate the majority of the housing for private sale or for property investors. Instead in consultation with the local authority and local interest groups the mix of tenure can be tailored to the specific needs of the area/region. In this way, the stock of housing can accommodate what is required so there can be a balance between homes for rent of all tenures and sale in proportion to needs of the community and not the financial imperative of the developer. This allows for housing for first time renters and also for retirement housing to be provided in conjunction with starter and family homes for sale and rent.

The CTP also allows for the provision of the relevant social infrastructure such as leisure, education, employment and medical facilities as part of the overall regeneration plan and not as an afterthought. This allows the CTP to work with the local community and the local authority in partnership to ensure that the facilities reflect the actual needs of the community. In this way, facilities can be provided for the whole demographic from primary schools for young families to care and extra care facilities for the elderly.

There are financial institutions queuing up to provide funding and expertise via the CTP to develop and produce genuine social and affordable housing in London. Both, Peter Gray of the Wellcome Trust and Nigel Wilson of Legal and General have stated this to be the case for their institutions and they are not lone voices.

As previously stated, by retaining control of the type and tenure of housing being built on public land, local authorities and the Mayor’s office can look to address the long term housing needs of London, without being bound by the short term financial interests of the private sector.

To summarise, The Mayor, London Boroughs and other public bodies should treat public land as the Crown Estate treats its’ land. The land should be seen as a long term community asset which is managed and looked after for the long term and for the benefit of the community. Public bodies should see themselves as stewards for this land and utilise it for the benefit of the community and not for a short term capital gain. Once the land is gone it is gone forever and in a city like London with an ever expanding population and a limited supply of land available for housing this cannot be allowed to continue.

The CTP model will facilitate the building of up to 80% of housing for social or affordable use and the remainder to help people get on the housing ladder for the first time.