A chronic undersupply of housing in this country is nothing new.
Over many years we have consistently fallen short of the annual home targets, currently standing at 275,000 per annum. But
our housing crisis isn’t just a crude numbers game. Across the UK, there are low income communities that suffer the effects of deprivation, often in areas where people do not choose to live. It is in these areas where life chances are diminished the most as a consequence.
With all crises, though, comes scope for innovation and opportunity – and the housing crisis is no different. An opportunity to think and act differently to transform failing communities across the country through a physical, social and economic regeneration process. A process that intensifies land use to deliver more homes of all tenures, deliver jobs and training to the local community and provide the key community infrastructure – including affordable energy and digital technology – to ensure the community is truly sustainable. In 2015, Savills reported that, in London alone, more than 1,750 hectares of existing housing estates could be ‘transformed’ to facilitate the delivery of 500,000 new homes across all tenures.
The innovation required is a new wave of public private partnership (PPP) 50/50 joint venture (JV) delivery models that recognise the limitations of retail house-building and the risk of being over-reliant, with or without grant subsidy, on registered social housing providers. PPP JVs can draw on the best from both sectors: the strategic vision of local authorities based on a deep understanding of the needs of their communities, alongside the capacity and delivery expertise of the private sector.
The 50/50 JV element is characterised by the public sector deploying their land assets (in lieu of equity) which is cashmatched
by the private sector partner and used to fund extensive pre-development costs. The JV vehicle should be procured efficiently by the local authority with the focus, ideally, on procuring the right private sector partner for the long haul rather than just procuring a one-off project. There are many benefits to this approach for local authorities: control is maintained, there is flexibility in terms of scope and asset mix and – most importantly – delivery is guaranteed. There is also the opportunity to share equally in all commercial upside on the basis of a 50/50 risk and reward principle.
At Pinnacle Group, we want to be at the vanguard of new PPP JV delivery models dedicated to transforming communities and delivering more homes. We have new shareholders with extensive funds who, alongside public sector partners, want to invest in communities – their creation, their regeneration, their operation and management – and to bring all our capacity and capability to create places where people want to live. We know we cannot do this alone. We need local authorities to work with us in
true, equal partnership.
This column was brought to you by Pinnacle Group