Monthly Archives: September 2014

Mayor’s new housing bank encourages development

London mayor Boris Johnson has seeded a new London Housing Bank with £200 million to support housing developments in the capital. The bank will supply low cost loans with the aim of accelerating housing projects that would otherwise go ahead at a slower pace.

The funds are promised from interest rates as low as one per cent, and will be advanced to developers and housing associations. The aim is to promote both homes for sale, and the construction of new homes for rent. There is a specific encouragement to bring forward affordable rent homes, with a requirement that they are rented at a 20% discount to open market rents, for a minimum seven years.

“Through the pioneering housing bank, I’m challenging the capital’s developers to get building, and deliver the homes Londoners need, as fast as humanly possible. Loans are available from a £200 million pot to significantly accelerate the pace of development, especially on bigger schemes, and unlock additional supply.”

 

Rental sector sees demand up, as supply decreases

Smaller landlords appear to be pulling out of the buy to let sector, just as demand from tenants is rising. Two thirds of letting agents are reporting they have more tenants registered than properties available, according to the latest quarterly survey from the Association of Residential Letting Agents.

The supply of properties actually decreased 6% in the last quarter, with the likelihood that the squeeze on supply will continue. Buy to let landlords appear to be selling their properties in greater numbers, to the extent that there are more properties leaving the rental sector, than new stock coming into the market.

“This activity has bucked the seasonal trend reported over the past 11 years for this quarter,” said David Cox, managing director of ARLA. “With landlords not investing in new buy to let property, tenants are finding it increasingly difficult to secure contracts.” While a good number of landlords are looking to liquidate their property assets, not all are finding sales at the level they expect, with the result that ARLA members are seeing an increase in properties returning to the rental market.

The round-up also noted that tenants are becoming a little smarter when looking at properties. A greater number are now checking out their landlords – albeit the number of those taking up references has only risen from 7% to 9%.

Westrock appoints former PRS taskforce member

Private rented investor and developer Westrock has appointed Dominic Martin to its growing management team focused on delivering its portfolio of private rented sector flats in projects around the UK.

Dominic Martin joins Westrock

Dominic Martin joins Westrock

Martin was formerly one of the government’s PRS Taskforce, and will provide Westrock with strategic oversight of its programme of developments, and operational platform.

Westrock currently has around 1,000 homes under development with a further 1,500 in the pipeline. It aims to build a portfolio of rented homes around the UK worth £2 billion by 2017.

Details of Westrock’s activities so far in the private rented sector were reported by resimarketnews.com here.

London & Quadrant makes major bid to grow PRS activities

Housing association London & Quadrant is planning a major push into the private rented sector, and is looking for investors to support a £1 billion fund to support the growth. The group wants to double its current 2,000 homes a year output, in London and the south east.

L&Q is already partnering to achieve larger scale developments and has already worked with housebuilder Barratt on the Altitude development in east London. It is also working closely with Development Securities on residential developments including the Old Vinyl Factory site in Hayes, where a number of private rental flats are proposed. Currently, L&Q owns or manages around 70,000 homes across the south east, though many of these will be affordable housing  only tenants on local authority housing need lists.

While many housing associations are looking at ways to expand their operations, few are yet active in the private rental market. However, a recent report suggested many are making substantial surpluses, thanks to rising rents, and therefore will be looking to reinvest those profits in further housing ventures.

A L&Q spokesman revealed to the Property Week publication: “We are currently piloting our PRS development with a fund of £250 million. We aim to increase our investment to £1 billion within the next three years.  From year three onwards, a sixth of our total development output will be designated for PRS.”

 

Kevin McCloud backs rental as route to better homes

Kevin McCloud, presenter of Grand Designs, has declared rental homes a key part of the solution to the housing challenge the UK faces. And he calls the common dislike of renting “an allergy” that needs to be cured.

McCloud heads the long running series that sees individuals build the home of their dreams, frequently pushed to breaking point – and close to financial meltdown – in the process. But despite his position, he is by no means sold on home ownership as the only way to resolve the UK’s housing shortage.

Speaking in an interview in the Times newspaper, McCloud noted that under current arrangements, there will always be a shortage of homes, and perhaps now is the time to take on board the renting tradition more prevalent in other European countries.”For a start we are going to have to reconsider how we choose to live, in terms of renting. There seems to be an allergy to that here and yet renting is a perfectly good idea. I rented for years and I loved it – no responsibilities, no clearing of gutters. It left me free to actually enjoy my life.”

Also in the feature, McCloud reveals how he dislikes some of the projects featured on the programme, particularly those that are oversize, in isolated positions and which do not deliver a homely feeling.

Miflats private rented brand launched into PRS market

UK developer and property investor Miflats has launched a new private rented brand, Miflats, which it intends will become a major player in the professional private rented sector in the UK. The newly formed brand promises to deliver a level of service and flexibility into the rental market, similar to that prevalent in the upper levels of the US home rental market.

The launch comes as Criterion readies its first private rented schemes, with projects including up to 2,000 flats in the planning stage. The company says it has a pipeline of around 10,000 units for delivery by 2020, and will establish Miflats as one of the most active landlords in the PRS.

“The landscape for the private rental sector is changing apace and being a passive investor is no longer an option,” said Iain Murray, director of PRS at the company. “The launch of the Miflats brand has been brought about by consumer demand for a rental product and service that suits their lifestyle. We have responded with a consumer facing brand and service that redefines the landlord/tenant relationship and brings it into the 21st century.”

East India Dock, where Criterion Capital plans to convert offices to create 1,500 rental flats

East India Dock, where Criterion Capital plans to convert offices to create 1,500 rental flats

Criterion’s private rented pipeline includes:

former Ford offices at Trafford House, Basildon where permission has been sought to convert the building to create 384 flats

Canterbury House, Astral House, 5 Bedford Park and Delta House in south London, which the company purchased with the intention to convert to flats for rental

East India Dock in London’s Docklands, where 1,500 flats are planned through the conversion of four existing office buildings – one of which is currently the town hall for Tower Hamlets council.

Criterion Capital has property development and investment interests across London, with its most famous asset being the Trocadero building on London’s Piccadilly Circus, where the company recently announced it will be creating the largest Ibis hotel in the UK.

 

Mayor signs off two major new rental projects

London mayor Boris Johnson has selected developers for two residential sites in east London, with 40% of the proposed new homes destined for private market rental.

The sites at Silvertown Way and Pontoon Dock will deliver around 1,200 new homes, of which 480 will be for private rental. The land is owned by the Greater London Authority, and is part of a tranche of sites taken on by the GLA in 2012, with the aim of bringing them into use quickly.

“These schemes will be built faster than conventional methods, by providing a US-style private rented model alongside traditional tenures,” said mayor Johnson. “It’s important for London’s economy to support the growing rental market, providing top quality homes and management, together with the reassurance of longer term tenancy agreements. I also want to entice more institutional investors to come forward and invest in quality homes for Londoners.”

The developments will include a restriction to ensure that the private rented homes cannot be sold off for a minimum period of ten years.

The larger of the two sites, at Silvertown Way in Canning Town, will accommodate 1,000 homes. It has been awarded to Galliford Try, working with Opal Land, itself a joint venture between Thames Valley Housing Association and Linden Homes. The project split will include 347 private rented homes, 232 for affordable rent, and 154 for affordable home ownership, along with 86,000 sq ft of commercial space. Thames Valley’s PRS specialist Fizzy Living is to manage the private rented homes within the development.

AA Pontoon Dock 1

Homes for rental at Pontoon Dock have been designed by Assael Architecture

At Pontoon Dock the development will include 137 private rented homes, 42 affordable rented and 31 shared ownership homes on a site next to Thames Barrier park. Here, the project will be delivered by Bouygues Development, Grainger and funding partner the London Pensions Fund Authority.

The Pontoon Dock project will be majority funded by the LPFA. Said the authority’s CEO Susan Martin: “Investing directly in the redevelopment of the Pontoon Dock site will not only deliver essential housing for London, but will also provide LPFA with the attractive, liability matching, long-term returns we need to provide for our pensioners.”

Essential Living hit by planning u-turn in Swiss Cottage

PRS developer Essential Living has had a setback in its plans to develop a site in Swiss Cottage, north London. Despite being recommended for approval, Camden council’s planning committee turned down the proposal for a 24 storey tower that would have delivered 188 flats, mostly for private rent.

Planning committee members bowed to pressure from a campaign led by local residents, which gathered a 3,000 signature petition against the project. A former English Heritage director involved with marshalling opposition branded the project “monstrous” and “grotesque”.

Objections to the tower came despite improvements the development would bring to Swiss Cottage underground station, and the fact that the proposed height is in keeping with the four 23 storey towers on the nearby Chalcot estate. Currently, a six storey office block sits on the site.

Essential Living plans a new, 24 storey residential tower in Swiss Cottage

Essential Living plans a new, 24 storey residential tower in Swiss Cottage

Despite the rejection by Camden councillors, the project may yet receive approval, as London mayor Boris Johnson has the power to overrule local planners on the project, due to its scale and significance. Johnson is also keen to get more homes built in London, and the Essential Living development would deliver 152 flats for private rent, plus an additional 36 affordable housing units.

This is not the first time Essential has had its development plans thwarted by London borough planners. Earlier this year, it had to appeal to the Planning Inspectorate after Islington council failed to determine an application to reclad an office tower in Archway. There, the objection was to the loss of office space as Essential converts it to housing; councillors also criticised the quality of the proposals.

Kier and Network Rail seek PRS investment partner

Construction group Kier, and UK infrastructure owner Network Rail are seeking an institutional investment partner to accelerate their development partnership, called Solum, and build more homes for rent.

The pair have already delivered more than 200 homes on sites that Network Rail has adjacent to rail stations. While many of these were sold individually, Solum agreed a portfolio deal in Epsom, selling 63 flats to Fizzy Living for private rented sector use. Fizzy, backed by their own investment partner and supported by Thames Valley Housing Association, are now renting out the apartments under their own brand.

Kier Property’s executive director John Anderson is now looking for a partner to take forward a 150 flat development in Redhill, south of London, ahead of potentially many more sites at other stations.

“We have 150 units in Redhill, and we would be interested to go and see what appetite there is for forward funding,” he told Inside Housing. “Commercially it’s an option we are looking to investigate and if it works, all the developments we do could have an ingredient of PRS.”

Anderson hinted at the rationale behind his bid to open up discussions: “It’s less to do with the funding an institution can provide, and more to do with the fact that they offer the perfect set of ingredients for PRS.”

While private buyers might not appreciate overlooking the railway lines, renters will be more inclined to appreciate the convenience of public transport connections almost on their doorstep. This is something GVA noted in their recent report, suggesting government should “stimulate PRS development on sites less suitable for owner occupier housing”.

“If you look at any wish list for PRS developers, at the very top is a site that has access to transport and ours are in the best possible position in that respect,” added Anderson.

In addition to the Redhill site, Solum’s pipeline includes sites in Haywards Heath, Twickenham and Guildford. Kier has recently launched a new housing division with the aspiration of growing its annual output up to around 4,000 units a year, over the next five years.

Government action demanded to support private rented sector

Two separate calls have come from those in the property industry, calling on the government to involve itself actively in the promotion of the private rented sector. Only with this level of support, they argue, can the sector gain traction, and help solve the UK’s housing crisis.

Agent GVA suggests three initiatives, to help the housing market. In its Development Outlook for summer 2014, the firm suggests there needs to be:

* a substantial expansion of the new town/garden city initiative

* further stimulation of the private rented sector “on sites less suitable for owner occupier housing”

* more public sector affordable homes

However, the researchers at GVA are under no illusions: “All these initiatives would require increases in government expenditure, which seems unlikely to occur in an era of public sector cut backs.”

That said, the government has previously committed itself to substantial support for the housing market including Help to Buy, Funding for Lending, Build to Rent and Get Britain Building. It’s just that, together, these initiatives may have helped in some way, but do not appear to have solved the key issue.

Meanwhile, PRS developer Fizzy Living believes it is only a change in planning law that will help move things up a gear. The company’s managing director Harry Downes says rental housing needs its own planning classification. “We need to get tot he point where the government, local authorities and planners understand the PRS,” he told Property Week, “where it has its own planning classification and where it forms part of a section 106 agreement.”

Downes has suggested his firm would bind itself to work with local authorities, introducing such restrictions as a cap on incomes for those eligible to rent. “If the government is serious about solving the housing crisis, then it just has to give local authorities the policy to make it happen.”