Features - Business

The Mayor of London’s draft London Housing Strategy

Claire Fallows, Partner at Charles Russell Speechlys, looks at the strategy and the effect it will have on housing in the capital.

In September, the Mayor published his draft London Housing Strategy for consultation until 7th December 2017. The draft is wide-ranging and there is much to be welcomed, including as a starting point the Mayor’s acceptance of the extent of the housing crisis in terms of the quantity of new homes needed and issues around affordability. However, at this stage, it offers little radical by way of solution. A number of key issues are summarised below.

Planning policy support: The draft outlines a need for the Mayor to work with the London Boroughs and Government to ensure that planning policies support additional housing land supply, including through clear housing delivery targets for Boroughs. Housing-led regeneration of London’s town centres and high streets and maximising opportunities arising from new infrastructure make for sensible planning. On the other hand, the Mayor’s continued support for protection of the Green Belt will disappoint those who consider a wholesale review of Green Belt policies and boundaries to be in the best interest of the capital.

Higher density: A shift to higher density development via new design-led density policies is to be encouraged. However, planning policy alone will not deliver the increase in density required. Too often authorities accept the theory of denser development but find reasons to reject detailed proposals, failing to work with developers to produce viable solutions. The Mayor will need to be ready to intervene directly and to use his powers to take over decision making where appropriate, to drive a more positive attitude towards higher density schemes.

Co-location of uses: To make more efficient use of land, the draft provides support for greater co-location of uses within buildings, sites and neighbourhoods. This will present opportunities for those prepared to look at and invest in new models of combining commercial or industrial and residential uses.

The Mayor also wishes to explore new fiscal incentives to encourage landowners to release inefficiently used land for redevelopment, such as surface car parks and single storey retail stores. The idea sounds promising. Yet incentivising landowners could well conflict with the desire to increase affordable housing delivery, the cost of which, when added to community infrastructure levy payments, drives down returns to landowners.

Small sites: Recognition of the need to help small builders is positive and follows recent Government support for smaller developers in the White Paper. In particular, a planning presumption in favour of appropriate residential development on small sites, alongside specific Borough level targets for such sites, could be helpful and is likely to increase the number of permissions granted. Boroughs may well be concerned about the impact on their ever-decreasing stock of industrial and commercial land and their rightful desire to maintain an appropriate balance of uses across their area.

Direct intervention: The Mayor himself promises to refocus City Hall resources towards projects releasing more land for housing and, where necessary, to adopt a more hands-on approach by intervening directly to co-ordinate key projects and assemble land, including through compulsory purchase. He continues to look to public sector landowners to lead by example. Direct public investment in site assembly, infrastructure, site clearance and remediation is to be welcomed and could act as a catalyst for complex brownfield redevelopments stalled due to the burden of upfront costs – but only provided any repayment terms imposed are not unduly onerous.

Investment: The draft highlights the need to target investment to accelerate and de-risk housing and regeneration sites, including through supporting access to finance for home builders and lobbying for a sustainable successor to Help to Buy when it comes to an end in 2021. The role of Help to Buy in London’s low to mid value housing market cannot be underestimated and the Mayor’s support for a replacement scheme will be welcomed by residential developers.

Construction skills: With current and future concerns about a construction skills shortage, the Mayor is eager to encourage more Londoners to take up a career in construction. Initiatives include a Construction Academy for London and a London Skills Strategy. With Brexit ahead, the draft Strategy highlights the urgent case for certainty over the rights of EU nationals to continue to work in London and the importance to the Mayor of the UK remaining in the European Single Market.

Transport: It is no surprise that the draft Strategy acknowledges that a step change in housing delivery requires a step change in investment in new and improved public transport. The opportunities that arise for the unlocking of new housing sites by schemes such as Crossrail are obvious. The draft refers to consideration of mechanisms for raising investment including by forms of land value capture. The future of the community infrastructure levy remains uncertain, but with public spending stretched, land value capture looks set to remain a hot topic in the future.

Build to rent: The Mayor remains keen to support build to rent, including through planning guidance and policy. The recognition of the distinct economics of this sector, including its reliance on a revenue stream funded by rents rather than upfront return on sales, is to be acknowledged by the embodying of guidance from August’s Affordable Housing and Viability Supplementary Planning Guidance within the draft London Plan. Whilst it is too early to judge the effect of the guidance, those looking to invest in the sector will take some comfort from the Mayor’s continued support.

All in all, the draft Strategy includes much by way of positive intent and there is a lot to support. It will be interesting to see how Boroughs respond. The Mayor’s willingness to intervene in the planning system to deliver new housing and the balance he strikes between achieving delivery of more houses overall, as against more affordable houses, will remain under scrutiny.