Seven views on London’s housing crisis and the need for a new development model
London’s housing crisis kept cropping up at yesterday’s Rising in the East event, held in the Olympic Park to mark four years since London 2012.
While the Centre for London-organised event was mainly about the past and future of the park, including more details on the involvement of UCL, the V&A museum, the London College of Fashion, and Entiq, my specific interest was in picking out what key speakers were saying about the housing market and its future.
From local mayors talking about the impact on their communities to regeneration chiefs explaining the barriers to creating ‘living rent’ developments to researchers trying to find a new model for valuation and development, here are seven key quotes.
Jules Pipe, outgoing mayor of Hackney and incoming London deputy mayor for planning, regeneration and skills
“Hackney, Newham, Tower Hamlets, Greenwich and Waltham Forest — all these boroughs have reaped ongoing economic benefits from the regeneration of East London, but we now face new challenges from an overheated housing market, the emotional and cultural impact of gentrification on our communities, and that is resulting in an increase in inequality.
“East London has changed beyond recognition but we still have high levels of poverty, deprivation and social need in all of the host boroughs and that is being hugely exacerbated by the pressures of the housing market that is being felt across the whole of London.”
Sir Robin Wales, mayor of Newham
“Housing is the big issue that is now facing a lot of my residents. People are being driven out of the borough because house prices and rents are going up.
“I know in the context of immigration, once you use the word ‘swarm’ … but the middle classes are swarming into our borough at a great rate of knots. So what are we going to do about it? We can’t sit back and watch people being driven out to the extremities of London, because that is what is happening. We’ll end up like Paris for god’s sake, with poor people sitting outside while everything else becomes a bastion of the middle classes.
“What we said is ‘We can’t fix housing immediately’, but we set up something called Local Space, a housing association, a few years ago. They borrowed £250m and we guaranteed the rents. We’ve got 1,500 properties now. We’re now in the biggest programme of buying homes and the idea is to fix the rent. And ok it might be 90% of market value but gradually that rent stabilises and people have a place to live.
“And I think we were the first to set up a housing company, Red Door [Red Door Ventures]. We are going to build 15,000 homes and we’ll build like any developer. We’ll take profits from the private rented sector and we will keep putting that profit — or a substantial part of that profit — into getting more affordability.
“So come back in ten years, or fifteen years, and we’ll have affordable homes, because we’ll do what the government used to do. The government used to say we have a responsiblity to make sure people have places to live at rents they can afford, so we will subsidise that and put money into it. That stopped — the government does not consider it is a responsibility that people can live here at rents they can afford.
“If you don’t believe me come to my surgery and Unmesh’s surgery [Unmesh Desai, London Assembly member for City and East] and see the people we have to deal with, people who’ve worked hard all their lives and cannot afford to live in Newham.
“The other thing we have done, we’ve licensed the private rented sector so we can at least make sure the standards are acceptable, and we have prosecuted more landlords than the rest of this country put together, because we have to create a place where people can live in decent conditions and can live affordably.”
David Edmonds, chair of the London Legacy Development Corporation
[answering an audience question about the possibility of LLDC housing developments offering a living rent tenure] “Housing is incredibly difficult. Housing is something that we have spent a lot of time developing with the sites we have already got underway at Chobham, East Wick and Sweetwater. There is affordable housing, by current definitions of affordable housing. The whole question of living rent I think we’re picking up in the next stages of development … it’s not easy.
“We have to pay back as a board the money that we have borrowed to do much of the work that we’ve done so far. Much of that income does come from land sales. Much of those land sales are postulated on the basis that they are sold into the private sector.
“At some stage government ministers and local mayors will need to take a decision about whether or not a different funding regime can obtain, that will enable land not to be sold in the way in which we are planning to sell it at the moment.
“We fully understand the need [for housing]. I was chairman of Crisis, the charity for the homeless, for four years. I chaired the Housing Corporation in the old days, when we built the best part of 40,000 to 50,000 houses a year in the social housing sector. So on the board we fully understand the needs.
“We’ve yet, I suspect, to find an economic mechanism that provides that rent level that you would like to see for people, particularly those starting off in family, school or university.”
Katie Kopec, principal adviser, regeneration and development, London & Partners, and director, development consultancy, JLL
[speaking straight after David Edmonds] “When it comes to housing generally, the need to get best value at the moment is a very difficult one for the public sector to achieve. Some of the things that we’re trying to suggest is that best value is not necessarily in terms of pounds, shillings and pence.
“It’s about delivery and it you can upscale the delivery, ie. build faster, [build] more, which is counter-intuitive for a private housebuilder because they don’t want to oversupply the market.
“So a different model is to be made, which I think is doable, if you can start to build at scale and public authority and public land is not about getting money out but about perhaps being paid in units and perhaps those units being at a low rent, a more affordable rent, to be able to cut the supply and demand piece away to make something a little bit different.
“The wonderful deliverability that you’ve got here [in the Olympic Park] is because there has been a single curator who knows what it wants and is able to take a view on what value is, but you still have the financial imperative which is perhaps holding everyone back from creating that big supply which will help give affordable rents.”
Alan Penn, Dean of the Bartlett faculty of the built environment, UCL
“We’re setting up a real estate institute [in UCL’s space in the Olympic Park]. Real estate is really boring. It tends to look at the price per square foot of space as an exchange value. It has great trouble with putting a value of quality of design and quality of urban place-making. It has great trouble in valuing heritage or sustainability.
“In my faculty we have all those areas of specialism … so what we’re doing is creating a real estate institute that focusing on the valuation of the intangibles, the public goods, and what we’re going to try to do is to transform the way that valuation dictates what gets built.
“So rather than just building things that the existing profession can value as a commodity, we start to value the public work, the public difficult-to-value aspects, and create the finance that will create the development that actually makes real places, that builds mixed communities rather than separating commercial, retail and housing.
“Why do we want to do this here? It’s because here it’s on the corner of the whole Thames Gateway area that my late colleague Professor Peter Hall invented and which has suffered from really poor physical planning ever since. The DLR, being on grade, severs one side from another. We have wonderful transport infrastructure in Stratford, but boy it creates boundaries. How do we overcome that? Well, by planning the whole of East London. That I think is a project for the next fifty years but I hope by bringing UCL in this direction we can help to stimulate.”
Yolande Barnes, director of worldwide research, Savills
“The built environment is delivered to us as a nation by developers whose primary aim is to make an annual return on capital employed (and maybe if they’re commercial a slightly longer term, but nevertheless in the context of the built environment a very short period of time). That is what drives the whole unseen environment into which things are delivered.
“There is a huge opportunity here [talking about the Olympic Park] insofaras there is a single controller of this land and that offers an opportunity to do something that has rarely been seen in London. And it is a squandering of that opportunity if land is parcelled up into plots and sold or granted to the highest bidder, and it will dramatically affect that plot.
“See, the surveyor can only do what the bank asks them to do, and what the bank asks them to do when valuing is to look at the fallback position is in a very short term, effectively what the raw land is worth. What we’ve been looking at a lot at Savills is long-term asset value … big institutions are now looking for long-term income streams, not short-term capital gains, and that changes the whole game.
“What it means is that the value you’ve put in at the beginning and what you build and how you build it and the quality of place is going to have a huge impact on that income stream. If the environment is not working hard on many levels — not just residential but also commercial and retail — then that environment is out of step with the value that’s created.
“Thinking how many people want to be here and pay to be here is the key to making sure that you put the right thing in here now that in 80 years time is still going to be attracting people.”
John Biggs, mayor of Tower Hamlets
‘We don’t necessarily need more money [as a council] but there’s a bit of debt-forgiveness that might be helpful in terms of the money that we owe the National Lottery and maybe the people in City Hall and ourselves can sit down and think about how we can reinvest the money we’re meant to be reinvesting from land sales in further regeneration of the area.”
[answering a question about what powers Sadiq Khan should ask central government to be devolved] “We need greater power to set and collect tax locally in order that we can use levers to help people. The great thing about business rate devolution is it opens up so many boxes … working with people like Yolande [Barnes at Savills] is important as well. Twenty years ago I wouldn’t have said that.”
Also worth reporting are comments by Rosanna Lawes, the executive director of development, London Legacy Development Corporation, in answer to a question from Sarah Gaventa, director of Made Public, about who the 650 homes planned in the Stratford Waterfront development are for. [The homes will be in the two towers on the left of the picture, with the London College of Fashion, V&A East and UCL buildings on the right.]
Lawes said: “The homes are very much part of the campus and the park. Not only will this scheme deliver homes for the market but also homes for our staff and people working in these institutions [London College of Fashion, UCL and the V&A]. Our plans at the moment are that they will be for sale. We are exploring private rented as an option as well.
“We’re also going to deliver on Pudding Mill Lane a further masterplan to deliver over 1,500 new homes and in particular focusing on affordable homes. I think what we’ve already achieved is an outstanding track record. We’ve delivered on our current two sites — just of the 2,500 homes that are on the site, we’ve delivered an average of 30% affordable. We’ve got a target to do more, targeting 35 [per cent], but we’re going to do more than 35, particularly on Pudding Mill Lane, we’re going to seek to address the Mayor’s ambition to deliver over 50% affordable [housing].”
