Future of London

8 October 2009

Delivering Housing Projects in the Current

Economic Climate – An HCA London
Perspective
David Lunts, London Regional Director
Homes and Communities Agency

Thriving communities, affordable homes

 This presentation:

1. What we’ve been doing

2. How we’re doing
3. Future challenges

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 London recorded house sales (end 02-08)

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 What have we done?

Keeping things moving:

1.Flexible grant rates

2.Tailored packages
3.New intermediate products
(HBD; Up2U; rent to homebuy)
4.Help with land purchase
5.‘Kickstart’ and the new
stimulus package

1.Using public land for new

models (inc. the public land initiative)
Developing new approaches: 2.Moving from grant to equity
3.Looking for new investors –
the Private Rented Sector Initiative
4.Sustainability – Low Carbon
infrastructure; SHESP; new design standards
5.The single conversation

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 How are we doing against the
Mayor’s targets?

Mayor’s Target Current 08/11

As at end August 2009 (08/11) Programme Position
London Plan target affordable 50,000 38,675
homes (of which HCA target is 44,165)

Larger homes (rent) 42% 37%

Larger Homes (sale) 8%/12%/16% 7%
Supported persons 1,250 1,960
Rent/LCHO ratio 60:40 57:43
Wheelchair units 10% new allocations 7%
Code for Sustainable HomesCSH 3 on all new build CSH 3: 77.4%
CSH 4: 21.8%

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 Future programme profile 09/14
HCA London - Expenditure
(estimate from 2011)
1600.0

1400.0

1200.0

1000.0

800.0

600.0
mitu
r£ n
d
p
E
x
e

400.0

200.0

0.0
08 09 09 10 10 11 11 12 12 13 13 14

HCA London - Completions 2009/14

10000
9000 Rent
Com ple
8000 tions
7000
Interme
6000 diate
5000 com plet
ions
4000
m
tH
o
sR
n
e

3000
2000
1000
0
08 09 09 10 10 11 11 12 12 13 13 14

6
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 ondon Kickstart

eeping projects alive

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 Kidbrooke (Greenwich)

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 King’s Cross

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St. Andrews (Bromley-By-Bow)

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 Hale Village – Haringey

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 Woodberry Down - Hackney

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Woodberry Down - Hackney

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Clapham Park - Lambeth

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 New intermediate offers

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Future challenges: Strategic choices & tensions

1. NEW HOUSING 2. AFFORDABILITY

SUPPLY

3. QUALITY OF 4. SUSTAINABILITY
PLACE/TACKLING
DISADVANTAGE

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Strategic choices – new supply

Market completions
have risen faster and
higher in London than
nationally

But this was sustained

by heavy reliance on
smaller flats and pre-sales
(c65% of total new build)

Loss of capacity will

prevent rapid recovery
across sectors

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Strategic choices – new supply
RSLs are expecting serious loss of capacity

45000
TSA predictions of annual capacity for new development

40000

35000

30000

25000

20000

15000

10000

5000

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2009 Capacity models 2008 Capacity Models

Source: TSA 2009

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Strategic choices - affordability

Real house prices have risen by more than 400 per cent in a generation

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It’s never been harder to be a first time buyer

House price to income and deposit ratios (London)

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Which is why there are less of them...

A couple on lower quartile incomes in London need to save more than a year’s
pay to meet the deposit on a home
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And the need for social housing is growing

London’s waiting lists have increased by nearly 80 per cent over the last 10 years

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Strategic choices - quality of place and life
chances
Inter- and intra-regional variations in deprivation, 2007

Source: 2007 Index of Multiple Deprivation, CLG (2009)

London is the most unequal of all the English regions

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 The Carbon Challenge
(East London Heat Network)

120,000 homes
100,000 tonnes annual CO2

Achieving an 80% reduction in greenhouse gas emissions by 2050 will

require emissions from households to be minimal
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 What have we learned?

1. Recessionary models have to be different

2. Problems are structural and cultural as well as cyclical
3. Equity models and a long term view of investment are essential
4. Public land can be key – and likely to remain so
5. S106 expectations have to change
6. ‘Total place’ investment will become more important
7. Long term residential investment models may be viable and could benefit occupiers, funds,
communities and the wider economy
8. We need more flexibility to deliver solutions for local conditions – London isn’t a
homogenous market

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 What’s next?

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 1.Cuts in capital programmes – pressure on VFM
will grow
2.Development & mortgage finance will remain tight
3.Signs of recovery, but market conditions will
remain fragile
4.Mixed use, regeneration and high density
especially challenging
5.Intermediate and FTB products more significant?
6.Institutional change?
7.Strategic partnerships more important – especially
on public land?
8.Pressure will grow to retrofit for climate change
9.Institutional investment in residential may become
viable – but only in certain locations
10.Supply/demand and affordability fundamentals
remain and can’t be ignored by government

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Thriving communities, affordable homes