The Rise of Public/Private Partnerships to Meet Housing Needs
There was a time when working in the public sector within residential development was, shall we say, not the first choice for most project managers, development managers, or others in senior positions in the real estate and built environment. The sector was poorly funded and poorly resourced. However, since the powers for local authorities to build were returned in 2012, the landscape has changed.
With a renewed approach to regeneration and commitment to provide affordable housing, London is now a hotbed for new residential development, with swathes of affordable housing planned or already under construction. But these are not affordable council houses as they used to be known. The public sector is now virtually indistinguishable from the private sector, with private and local authority homes sitting side by side.
The scale of development is unprecedented, and there are now exciting residential development jobs to help deliver these eyewatering projects in the capital.
What Has Changed in Public Sector Residential Development?
Since Right to Buy was introduced in the 1980s, the number of council houses in the UK’s housing stock has dwindled. Exacerbating the issue was the withdrawal of powers to build new council homes. In 2012, this power was returned.
This has coincided with the well-reported housing crisis: a combination of lack of supply and increasing demand producing high house prices and an inability of many people to get on the housing ladder. To tackle this crisis, the government now has a target of building 300,000 houses every year across the UK by the mid-2020s.
In London, the housing market is at breaking point. In response, the government has provided £4.8 billion of funding to build at least 116,000 affordable homes by March 2022.
Mayor Sadiq Khan has a target of building 65,000 new homes each year, with half of these to be affordable homes. To achieve this target, the Mayor’s office has recommended that councils start building again. They have taken up the challenge:
• Between 2003 and 2010, councils built only 70 homes in London
• Between 2010 and 2017, councils built 2,100 homes in London
• In October 2018, the mayor’s office distributed £1 billion of funding to 26 of London’s 32 boroughs to build 11,000 new council homes by 2023.
How Are Councils Delivering Council Homes and Affordable Homes?
Sadiq Khan’s ‘Building Council Homes for Londoners’ plan prioritises affordable housing. He has relaxed planning rules to make it easier for councils to release land for development. Borough councils have gone much further. Many have been quick to become developers in their own right, or in partnership with private developers. For example:
• Brick by Brick in Croydon
• Red Door Ventures in Newham
• The Old Oak and Park Royal Development Corporation, a mayoral development company
• In Barking and Dagenham, the council plans to build more than 40,000 new homes by 2032
The result is delivery of private-housing quality residential estates, with mixed tenures – and some of these schemes are huge. These developments benefit from better architecture and better placemaking. It is difficult to tell the difference between affordable homes and those for private sale.
Regeneration Led by Councils
Looking at just a few of the regeneration projects under development will give you a flavour of the sheer scale of the residential building taking place and the quality with which the public sector is being developed.
• Old Oak and Park Royal Development Corporation (OPDC)
A colossal 650-acre site in West London, centred on the High Speed 2 and Elizabeth line infrastructure projects, the vision is for a new community to be built here, with mixed-tenure homes and commercial space surrounded by sustainable and thriving neighbourhoods and valued amenity space.
Regeneration here will deliver 25,500 new homes, a new town centre, new schools, culture, and leisure opportunities, with development completely controlled by OPDC. The location will benefit from new and improved streets, green and open spaces, and incredible connectivity.
• London Legacy Development Corporation
The London Legacy Development Corporation is a mayoral development company responsible for an area at the London/Stansted/Cambridge/Peterborough Growth Corridor and the Thames Gateway Growth Corridor. Within East London, the area is directly connected to the major business and growth hubs of Central London, Canary Wharf and the Royal Docks.
Its objectives include delivering more than 24,000 new homes encompassing a range of sizes and tenures. There will be at least four new primary schools, new community and health facilities, and plenty of green space. It plans to build 1,471 new homes (of which 455 will be affordable homes) each year through to 2031.
• Barking Riverside
A partnership between the Mayor of London and L&Q, the plan is to deliver 600 new homes each year as a new riverfront town is created at Barking Riverside in East London. Half of these new homes will be affordable housing.
This new town will stretch along 2km of the River Thames and comprise of 10,800 homes. In addition, there will be a new Barking Riverside station with services running from 2021, 8km of cycle paths, a new riverboat service, new schools, and commercial and cultural offerings.
This project will take 15 years to complete, and encompasses a cultural and placemaking strategy that will be under constant review during construction.
All Systems Go with More to Come
In London, it is all systems go on the regeneration and development front, especially in residential. It is likely that the momentum that is building in the public sector will gather pace as more funding is unlocked and councils begin to reap the benefits of their strategies.
There is a sense of total commitment to the objectives of developing hundreds of thousands of new homes across London. This commitment is accompanied by a new dynamic – councils don’t just want to build new homes; they want to create quality homes in quality locations.
Here at Macdonald & Company, we are witnessing a boom in jobs in London in the public sector with demand for talented employees across all disciplines. These projects are exciting, and the opportunities they offer are exceptional. Just like the difference between houses in the public sector and private sector have virtually disappeared, so too have the differences in salary and career potential.
For a confidential conversation about your career and the exciting opportunities in London real estate, contact us today.