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Momentum in public/private joint ventures builds as structure now accounts for 22% of adopted housing models on public land

Wednesday, 22 November 2017

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With the draft London Plan forecasting the need for 69,000 new homes per annum in the capital, GVA has initiated research into public sector-led housing delivery models which demonstrates that such models now account for the delivery of 180,000 homes across the boroughs of Greater London.

Although 63% of public-sector bodies still use the traditional development agreement model to deliver housing, increasingly other models are coming to prominence as the national housing crisis continues to dominate the national agenda and the need for innovative and effective delivery grows.

In collaboration with Future of London and supported by Oak Foundation, BLP Insurance and Lewis Silkin LLP, GVA has aligned a broad range of expertise in both the public, private and third sectors. The joint six-month programme combined research, interviews and roundtable discussions to assess which public sector-led models for delivering housing are being used in London, why certain models are more successful than others, the quantity and type of housing they’re delivering, and what factors are affecting their success.

Key findings:

  • There are an estimated 180,000 homes to be delivered across the various models
    • 63% of these are through the traditional development agreement model
    • 23% through the increasingly prominent public/private joint venture model
    • 8% will be through a wholly owned public vehicle
    • 6% of these homes are through direct public sector delivery. This is despite only eight boroughs to date investing directly in housing development, meaning that this comparatively under the radar activity is still contributing to 9,900 new homes to London, at an average of 1,200 homes per programme.
  • Overall (with planning) – 31% affordable, (15% social rent, 16% intermediate)
  • Circa 35,000 further homes planned using such models at Old Oak Common and in/around Olympic Park alone
  • Oliver Maury at GVA said: “As more of GVA’s clients come to play an active role in solving the housing crisis, it is important to understand the nature, scale and issues surrounding active housing delivery models being applied to public land. The significance of the challenge present in the housing sector is very real at this moment in time, but through an improved understanding of active housing delivery models we can better identify the structures that best meet our clients’ needs.”

    In addition to providing clarity on how housing is being delivered on public sector land in London, as well as the quality and spread of this accommodation, the research also identified some of the barriers facing such models. These include issues around funding and resources. For example, no matter what the housing and community aims, a joint venture is a commercial vehicle; for private investors, a scheme cannot be viable unless it has a clear and identifiable exit strategy that achieves requisite returns, whereas the public sector is able to take a longer term perspective on funding risk. In addition, skilled and consistent resources are needed to manage public sector-led housing delivery vehicles, which can be threatened by budget cuts, the migration of talented staff to the private sector or other organizations, and a lack of integration corporately between local government departments.

    Click here to read the report