London Housing Company: A proposal from the LDA

Credit Crunch & Recession: Impact on new build housing

The imperative for intervention: stalled regeneration

Attractiveness of London to business Leader Availability of qualified staff1111London Easy access to markets1111London Quality of telecommunications1111London External transport links1111London Cost of staff Warsaw Climate for doing business5256Dublin Language spoken1111London Office space - value for money Leeds Internal transport1112London Availability of office space5213Berlin Quality of life Barcelona Freedom from pollution Oslo European Cities Monitor, Cushman & Wakfield ( ) The imperative for intervention: London’s offer

The imperative for intervention: household growth

A need for new business models Average deposit of London first time buyers = £32,500 Equivalent for average property = £45,500, plus £10,500 in stamp duty. CML June 2008 Buy-to-let gross advances totalled £2.1 billion in the first quarter, down from £4.0 billion in the fourth quarter and £9.5 billion in the first quarter of last year. CML Aug 2009

Sources of housing investment falling

8 House price falls reduces incentives to build Source: Communities and Local Government: House Prices Index August 2009

But long term private rental returns can offer a stimulus to build Source: GLA rent bulletins and unpublished surveys Whilst rental yields have softened during 2009, due to increase in properties being made available, they could form part of stimulating a new private build solution.

Long-term expectations are for house price increases in London Source: Experian Business Strategies

Is there a business case?  HCA PRSI initiative indicates institutional investors are interested  Institutional long term investment expectations c.5%  But current residential rental yields average c.4% How can we bridge the gap through new build for private rent?  Deferring public land receipts via equity stakes  Reduce costs of development finance by borrowing at scale  Innovative procurement to reduce construction costs  Maximising the income stream via services & greener homes  Creating development certainty by enabling the planning system  Open book valuation to build trust & speed the process  Minimise voids – provide rental stream security

A London Housing Company Development finance securitised against a public land portfolio LHC Governance Board Investment Management Public land & schemes and support for development. Assurance on voids Public body sponsorship Open book developer margin Development Panel Open book rental return (5%+ net yield) Property Management Panel Pension funds & other institutional investors LAs, HCA, LDA & others Developers & RSLs RSLs & new entrants

An offer from the LDA  Pool LDA land with boroughs to achieve economies of scale  Fund much of the start up costs  Work collaboratively with the HCA  Explore the appropriate measures to assure investors  Extract value from high quality design & services  Construction training & employment

Available Public Sector Land Source: LDA – London Brownfield Sites Review (Public sector land suitable for housing)

Available Public Sector Land Source: LDA – London Brownfield Sites Review (Public sector land suitable for housing)

Available Public Sector Land Source: LDA – London Brownfield Sites Review (Public sector land suitable for housing)

Potential Housing Land Capacity