On 3 December 2014, a group of experts including operators large private rented sector (PRS) developments, academics and representatives of landlords, real estate consultancies and NGOs met at the LSE for workshop on maintaining and increasing the supply of PRS housing in London. The following blog post summarises the key themes that emerged from the workshop

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11/07/2017 Workshop: Accommodating ‘Generation Rent’ – how to overcome barriers to institutional investment in London’s private rented sector | Ac…http://lselondonhousing.org/2014/12/accommodating-generation-rent-how-to-overcome-barriers-to-institutional-investment-in-londons-private-rent… 1/5  1 Comment  Posted on December 3, 2014 by lselondonWorkshop: Accommodating‘Generation Rent’ – how toovercome barriers toinstitutional investment inLondon’s private rentedsectorOn 3 December 2014, a group of expertsincluding operators large private rented sector (PRS)developments, academics and representatives of landlords,real estate consultancies and NGOs met at the LSE forworkshop on maintaining and increasing the supply of PRShousing in London. The following blog post summarises thekey themes that emerged from the workshop:Maintaining and increasing the supply of private rented housing in LondonThe UK’s capital city is also the capital of private renting. Some 25% of Londonhouseholds rent privately, compared to 14% in the country outside London. Ineight boroughs, including several in outer London, more than 30% of householdslive in the PRS. And the combination of soaring house prices and tighter conditionson mortgage lending means that many private tenants, including families withchildren, won’t be able to buy their own homes anytime soon—or perhaps ever.HOME INTERACTIVE MAP THEMES ABOUT EVENTS MEDIA PUBLICATIONS11/07/2017 Workshop: Accommodating ‘Generation Rent’ – how to overcome barriers to institutional investment in London’s private rented sector | Ac…http://lselondonhousing.org/2014/12/accommodating-generation-rent-how-to-overcome-barriers-to-institutional-investment-in-londons-private-rent… 2/5London needs more new housing in all tenures, but particularly private rentedhousing given the sector’s key role in the capital’s housing market.Policy makers, recognising this, have put in place a number of initiatives toincrease the supply of private rented housing at scale. However it’s not enough justto build new PRS housing.   Private dwellings can move seamlessly in and out of therental sector (in this country, not everywhere), so it’s also important to look at howto keep existing housing in the sector.To discuss these challenges we hosted a workshop on 3 December. Our goal was totry to identify the barriers to increased investment in rented housing (whetherentire dedicated buildings or PRS-appropriate units) and think about how to keepexisting supply. Participants included operators of some of London’s existing PRSdevelopments, as well as academics and representatives of landlords, real estateconsultancies and NGOs.The LSE London team listed a number of barriers to large-scale investment in thePRS. These included:Developers wanting to build housing for owner-occupation can pay more forland than those looking to build PRS unitsDevelopment  nance in short supplyRisk-adjusted yields on the PRS too low for major investorsUK institutions comfortable with investing in commercial property butunfamiliar with residentialInstitutions want to invest in lots worth at least £25 million; they are notinterested in assembling portfolios of small-scale propertiesManagement requires experience and know-how which many investorsdon’t have.These barriers were identi ed in the course of research last year in the Scottishcontext. Do they apply equally in London?   Are there other important issues? Andwhat policies or practices need to change?Participants agreed that most of these barriers did apply in London to somedegree. The main exception was development  nance—this was no longer much ofan issue and in fact now is ‘the best opportunity we’ve ever had,’ according to oneexpert; another said there is ‘plenty of money on the sidelines, but people just11/07/2017 Workshop: Accommodating ‘Generation Rent’ – how to overcome barriers to institutional investment in London’s private rented sector | Ac…http://lselondonhousing.org/2014/12/accommodating-generation-rent-how-to-overcome-barriers-to-institutional-investment-in-londons-private-rent… 3/5aren’t sure they can spend it’. Management skills were a concern, but there wasinterest in for example the Unite student housing model, which demonstrates thatlarge-scale purpose-built developments can be well managed. Viability is an issuein London, partly because developers are con dent they can sell new-build inforeign markets.Overall, London was seen to be different from the rest of the country because ofthe potential for long-term capital growth. Participants cautioned, though, againstgeneralising too much—yields and market conditions differ enormously betweenboroughs or even neighbourhoods.There are already a few large-scale PRS schemes operating in London, havingbought entire new-build blocks. In these cases, the dif cult bit was amassing a bigenough portfolio to achieve economies of scale on the management andmaintenance. Once the developments are populated the biggest challenge foroperators is ‘making it a great place to live’ by organising events and buildingcommunity. Experts largely agreed that it is too early to think about strongbranding; it was more important to address the uneven standards across thesector. Accreditation schemes could play a role here. Even in the States, whereprivate renting is more prevalent than in the UK, there are few established PRSbrands.Given that families are staying longer in the sector, there has been muchdiscussion about the desirability of tenancies longer than the standard 6- to 12-month AST. The PRS operators had experimented with offering tenancies lastingup to  ve years, but found that many tenants said they preferred shorter, more exible leases.The government seems to want the PRS to house a range of incomes—is thisrealistic? Tenants in larger schemes tended to be relatively well-paid professionals;it wasn’t a solution for low-income households. Some participants felt stronglythat the greatest need was for relatively low-rent accommodation, and that thistype of institutional PRS did not supply it. This explained local authorities’ dilemmaabout how to deal with planning applications for PRS blocks. Local authoritieswanted more housing but preferred it to be affordable—and weren’t in generalwilling to let developers use PRS to ful l s106 requirements. Local authorities needto be convinced that an increase in new PRS will improve their housing stock. Infuture, welfare reform will de nitely have an impact on the ability of low-incomehouseholds to access the PRS in many areas of London.11/07/2017 Workshop: Accommodating ‘Generation Rent’ – how to overcome barriers to institutional investment in London’s private rented sector | Ac…http://lselondonhousing.org/2014/12/accommodating-generation-rent-how-to-overcome-barriers-to-institutional-investment-in-londons-private-rent… 4/5← Pro le: Millbrook Park, Barnet‘Game Changer’ for Housing Supply: Jo Negrini’s Thoughts →But there are reasons to be positive: land in London is not controlled by bigbuilders, so there may be more available for PRS developments—especially if bigsites are parcelled. One idea might be for public landowners to maintain a degreeof control over developments by retaining an equity stake or keeping the freehold.Also, including PRS can mean that big developments (say, more than 200 units) arebuilt out quicker, as institutions can buy early and provide cash  ow. At the end ofthe day, though, participants agreed that the PRS alone can’t solve London’shousing problems.  Category: Improving Private Renting, Recent News, WorkshopsOne Comment on “Workshop:Accommodating ‘Generation Rent’ –how to overcome barriers to institutionalinvestment in London’s private rentedsector”Pingback: PRS Pro les: Learning from tenant experience to improve privaterenting in London | Housing in London: Addressing the Supply CrisisLeave a ReplyYour email address will not be published.Required  elds are marked*Comment11/07/2017 Workshop: Accommodating ‘Generation Rent’ – how to overcome barriers to institutional investment in London’s private rented sector | Ac…http://lselondonhousing.org/2014/12/accommodating-generation-rent-how-to-overcome-barriers-to-institutional-investment-in-londons-private-rent… 5/5Contact us:Twitter - @LSE_LondonFacebook - LSELondonGeographiesYouTube - LSE LondonEmail - lselondon@lse.ac.ukLogos and map designed by Alessandra Mossa. 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Workshop: Accommodating ‘Generation Rent’ – how to overcome barriers to institutional investment in London’s private rented sector

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