Build to let case still needs to be made

prsAttending the launch of the Urban Land Institute’s Best Practice Design Guide for Build To Rent, it is clear there is now the level of engagement between the operator, investor and construction/ design professions needed to drive institutional Private Rented Sector development forward.

A more persuasive approach to development viability and planning is still needed, though.  Build to Let (B2L) developers need to provide a more persuasive model than cheap public land and affordable housing waivers.

Scaling Up

We have previously highlighted the role that planning needs to take to help use the PRS as envisaged by the Montague Review.  Taking a real chunk out of the million homes UK plc needs over the next decade is the goal. As Nick Jopling – UK ULI Residential Council Chair – made clear, B2L it is a real proposition for institutions where it can be delivered at the right scale.

Institutional PRS can, and should, have a key role to play in reinventing and densifying Garden Suburbs around London.  Without it, the 49,000 homes needed are unlikely to arrive. In the longer term, it should also have a real role in the institutional structure of new towns.  To achieve that, equity participation in long-term residential investment in new settlements should be rewarded. We should learn from aspects of the US multi-family tax regime and explore how the planning system can create investor certainty.

Powers and persuasion

The PRS sector has much to do to persuade planning authorities that the viability constraints of B2L are worth paying attention to, both in terms of more flexible application of policies which impose cost burdens and the use of planning powers to assemble land at the right values.

As we have noted before, the PRS viability debate is currently one-dimensional. The onus is squarely on the emerging B2L sector to explain:

  • the demographic need for rental accommodation (and its relationship to housing need and affordability);
  • the benefits of certain types of PRS in different Housing Market Areas;
  • how those benefits can be secured and over what timeframe they should be locked in.

Time is on

Timing is crucial – the opportunity for embedding PRS in this way is linked to the evidence base for Local Plans, in particular the Strategic Housing Market Assessments which often fail to fully recognise the demand for new rented stock.

The sector is doing what is can to drive down build and operational costs.  Persuading authorities that PRS goes beyond super prime apartment blocks and that meeting the needs of Generation Rent is a worthwhile cause is the next step in the viability process for B2L.

Housing our needs

In almost all emerging local plans, there is a perceived problem meeting the need for private rented sector (PRS) housing.  Part of the issue is a lack of imagination about the tools that are available.  Although the following list is by no means complete, it may start a thinking process that, locally tailored, would help to deliver more homes of all types, while maintaining and securing mixed and balanced communities. 

Where there is a PRS need, and it is viable, local planning authorities should consider:

  • critically, as the NPPF suggests, allocating more market housing that can be used to support other housing requirements – never treating “need” figures as maximums;
  • identifying sites that could be used exclusively for PRS;
  • identifying suitable sites where a high proportion of any homes should be for PRS;
  • having a policy that requires all residential developments to have a percentage of PRS;
  • identifying sites that might not, in other circumstances, be developed for residential use (for example in another use or in the countryside) and allowing them to be developed provided that they are preserved for PRS over the long term;
  • since the need for new homes is intrinsically linked to economic development, requiring new employment development to contribute towards the provision of PRS;
  • if appropriate, and where robustly justified, having clear local plan criteria that allows PRS to be provided off site where this significantly increases the scale or quality of PRS being provided in a community;
  • having a local plan policy that, exceptionally, allows financial contributions to be made to a PRS housing fund;
  • using the PRS housing fund imaginatively to, for example, convert existing market homes to PRS use, particularly exploring the opportunities for new homes above and within our high streets and for the conversion of existing homes to create units that meet present PRS needs;
  • where sites have been allocated then using CPO powers to make them available for PRS development, at a compensation value that reflects the new designation.

Clearly the same tool kit could also be used for affordable housing.  Where there are sites with existing consents then perhaps the emergence of a new breed of local plan policies might give an incentive to build out, giving a softer transitional edge to some of the present “use it or lose it” rhetoric.   Given the publication of the Mayor’s Housing Strategy on Monday it is clear that far more needs to be done to help deliver housing.  Being a bit more adventurous with the planning tool kit would be a good start.