Funding PRS – how the government, mayor and market are responding to increased demand in the private rented sector

Thursday 26 September 2013

360 London by Essential Living, designed by RSHP

Government, the mayor and the market are all working hard to kick-start the private rented sector as part of the answer to the housing crisis in London and the rest of the country. But the image of renting housing must change from a sector where people ‘end up in’ to one which is the tenure of choice.

Those were some of the key points to emerge from a breakfast talk at the NLA this morning at which Andrew Stanford, head of the PRS Taskforce at the DCLG, spelled out some of the main challenges.

‘The government is determined to build a bigger and better PRS’, he said, beginning by building partnerships and ‘shaping demand’, having had over 400 face-to-face partner meetings since the taskforce’s inauguration a year ago. It is working on releasing public sector land, engaging with local authorities, and advising planners that they should take tenure into account when assessing housing need. The economics of build to rent, said Stanford, can be different to build for sale, so might need a different planning approach. The taskforce is also working with the ULI on preparing a guide on design and construction, asking things like whether off-site construction can help, and recognises that in terms of legacy this new asset class needs ultimately to ‘stand on its own two feet’.

Deputy mayor for housing, land and property at the GLA Richard Blakeway said that in contrast to the 1950s when there were only two big cities – Tokyo and New York, London’s population trajectory means the UK capital will exceed that of New York’s by the end of this decade. But unlike those cities, purpose built, rental held accommodation is not a real feature here. We are building only half of what we need, and if we are to hit 40,000 a year, ‘we’re going to need something new’, he said.  In the Netherlands 37% of their market is built to rent, but Blakeway said he expects London’s figure to rise from 25% to 38% over the next decade. ‘For most people, PRS is not a tenure of choice’, he said. ‘What we have to do is raise expectations in this sector but also improve the product.’

The conference also heard from GVA senior director, head of strategy and delivery Gerry Hughes, who said there is around £7bn of private investment available to support PRS but very few examples of actual build to rent schemes coming out of the ground. Investment is coming in, but mainly from the US, Europe and Middle East rather than from UK banks or pension funds. But one company which is pushing forward with PRS schemes is Essential Living, whose development director Nick Cuff took the audience through its ‘ground-up’ approach to designing, building and holding properties to rent. The one-year-old firm has 1600 units in the pipeline and aspirations to do 5000, based on four ‘new rules of renting’ – that rental is a lifestyle choice; looks after residents; creates neighbours; and means quality. The schemes – which include ‘a hotel feel’, generous lobby spaces, clubrooms and community facilities, often on the top floor – include the 45-storey, Richard Rogers-designed 45-storey ‘360 London’ tower in Elephant and Castle.

David Taylor, New London Quarterly

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