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29/09/2016

Boosting private rental can solve London's housing crisis

Words:
To let signs

Policies designed to boost the growth of the private rental sector could go a long way to alleviate London's housing crisis, argues Tom Hyde

The uncomfortable fact facing London at present is that not enough homes are being built. The fact that home ownership is at its lowest rate for 30 years is merely one indicator of this. With the market experiencing continued growth in the private rented sector (PRS) however, the government can help alleviate the housing crisis through engaging in policies designed to promote its growth.

A number of established brands are already starting to enter the PRS market through smaller subsidiaries – Wilmott Dixon through be:here and Thames Valley Housing through Fizzy Living. Yet despite this potential, the government has not to date issued any planning guidance for the sector, and therefore risks missing the ability to harness the full potential of the PRS.

This lack of proper guidance has caused local councils to step up and issue their own guidance, with London in particular leading the way with this. However, because guidance has been drawn up by individual authorities, it is incredibly varied, causing difficulty for developers and planners.

"The growth of the PRS should be fully utilised through sensible planning guidance and an extensive legislative framework"

Nexus Planning has reviewed how each London Borough views the PRS in its planning guidance. Our findings revealed that only eight boroughs take a positive view of the PRS, with five highlighting the importance of the PRS in their housing stock whilst doing nothing to support its growth. Twenty boroughs, representing the majority of London, do not recognise the PRS anywhere in their planning policy, instead heavily favouring the provision of affordable housing as defined by central government and City Hall.

Some councils however have started to make the growth of the PRS work in their favour by setting up their own development companies. Our research demonstrates that 11 boroughs have created or are seriously considering starting their own housing development company. This must surely be encouraged and, with low interest rates currently dominating the market, now is the time for councils to embrace this opportunity.

This sits in contrast to 12 boroughs that are totally reliant upon housing associations and the private sector more generally to provide their housing stock. Whilst this means that their policies remain more closely aligned with the wishes of Sadiq Khan, they are denying themselves a sizeable source of revenue that could be used to improve council services more generally.

The growth of the PRS should be fully utilised through sensible planning guidance and an extensive legislative framework. A solution put forward by many is to introduce a specific Use Class for PRS development. On balance however, this would unnecessarily complicate an already convoluted process. Instead, the government, supported by local councils, must lead the way in issuing consistent and comprehensive planning policy through the introduction of well-planned legislation.

Tom Hyde is a senior consultant at Nexus Planning

Photo | iStock

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