Next Mayor must take ‘bold action’ on build to rent if London is to remain competitive

14 Mar 2016

Policy area: Residential

The next London Mayor must allocate a quarter of all public sector land for build to rent, identify twenty new build to rent opportunity areas, and increase the yearly build to rent target by fifty per cent if it is to tackle the housing crisis head-on, according to a new report.

The British Property Federation (BPF) has urged the new London Mayor to take bold action to address the shortage of homes in the capital in its housing manifesto for the London Mayoral candidates, published today.

The organisation outlines how the build to rent sector has the potential to deliver a significant amount of new homes for the capital, as well as improving standards in the private rented sector. It warns of the detrimental impact that rent controls could have on the sector, as well as the negative impact an increasingly negative rhetoric around foreign investment, 

The publication further explains how infrastructure delivery is crucial to encouraging new development, dubbing it “the closest thing to s silver bullet” for housing delivery. 

The ten recommendations in the report are: ​

1. Speed up public land release and target a quarter towards build to rent
A quarter of all public land released in the capital should be targeted at Build-to-Rent.

2. Revise the build to rent target to 7,500 homes per year
The next Mayor should revise his build to rent target to from 5,000 to 7,500 units per annum.

3. Get in the zone! And continue support for Housing Zones policy
The Housing Zones policy should continue, focusing on specific locations and offering a package of measures which support housing delivery in those localities.

4. Identify 20 build to rent opportunity areas to kick-start regeneration
The new Mayor should identify 20 specific build to rent opportunity areas in town centres or sites that are close to transport nodes, where Build-to-rent can kick-start regeneration.

5. Recognise the realities and upsides of foreign investment
An effective way to ensure that foreign investment is constructive is to channel it in to build to rent. High rental demand in London will ensure that these new units are not left empty.

6. Promote affordability by enshrining DMR in the London Plan
By encouraging the use of discounted market rent (DMR) within build to rent developments, the new Mayor can ensure a range of housing is supplied at the same time as providing a seamless block that is tenure blind for occupiers, 

7. Improve standards by creating a self-enforcing landlord register
Registration is a less burdensome approach to improving standards in the private rented sector than licensing, but it must be done in logical and full-proof way. Simply setting up a register and expecting criminal landlords to register is simply not credible. No criminal landlord will ever volunteer to register. Registration must be reinforced through other interactions with the state.

8. Resist the political temptation to intervene on rents
Rents should be set according to sound economics, and what will attract investment and help maintain property standards, and should not be used as a political football. Applying rent controls would be a mistake, leading to less investment in the capital's housing. 

9. Pursue greater fiscal autonomy to borrow against future tax receipts
The Mayor should be given greater fiscal autonomy. Being allowed to borrow against future tax receipts could be a powerful tool to raise funds for the delivery of infrastructure that might help unlock development sites. 

10. Prioritise infrastructure investment: the closest thing to a silver bullet
Investment in infrastructure opens up new opportunities, makes land attractive to develop, and creates accessible places where people want to live. The Mayor must champion central Government spending on London’s infrastructure, including Crossrail 2 and 3, and prioritise schemes that will support housing delivery.

Ian Fletcher, director of policy (real estate), at the British Property Federation, said: “All leading Mayoral candidates have identified housing as one of the most important issues affecting London today, and rightly so. We need to ensure that London has the right amount of homes of different tenures in order to ensure that the capital attracts and keeps the talent that makes it a world-class city.

“The purpose-built private rented sector has enjoyed considerable support from Boris Johnson over the past few years, and with investment starting to pour into the sector, it is imperative that the next Mayor continues this momentum. Build to rent has the potential to deliver an enormous amount of new, high-quality homes and we hope to see Boris’ successor take bold action to harness investment and encourage development of this nascent sector.”

ENDS