Can public private partnerships help address the shortage of rental homes?

Paul Belton, Partner, Carter Jonas (Cambridge) looks at the ongoing challenges of supply within the PRS and how the public sector is successfully being used to help address them.

Related topics:  Property,  PRS,  Rental Market
Paul Belton | Carter Jonas
20th December 2023
question 833
"England last delivered in excess of the now defunct target of 300,000 homes in 1977, at the height of its council house building programme"
- Paul Belton - Carter Jonas

Rents, as a portion of earnings, are at their highest level for over a decade - equating to 35 per cent of the average income of a single earner in December based on Zoopla’s statistics, and rising at a rate of 4.7 per cent annually according to the Office for National Statistics.

This is the result of many factors which have been aired previously on this website, but the most significant is undoubtedly a lack of supply. The trade body Propertymark states that in March more than 100 prospective tenants on average registered at each lettings agency, ten times the number of available properties. And the number of new homes being built is woefully low, at 191,801 in 2022 (NHBC figures).

It is no coincidence that England last delivered in excess of the now defunct target of 300,000 homes in 1977, at the height of its council house building programme.

Since then the number of homes delivered by local authorities has dropped from 145,070 in 1977 to 3,800 in 2019. While the proportions delivered by both housing associations and private sector have increased significantly, the deficit of affordable homes looks set to remain.

However, from Scarborough to West Sussex and Maidenhead to Cambridge, Carter Jonas is involved in partnerships and pioneering developments which are significantly increasing delivery in these areas.

For example, we are working with Cambridge Investment Partnership (CIP) to deliver 1,000 new council homes in Cambridge. CIP was established as a partnership between Cambridge City Council and local housebuilder Hill, in response to the ever-growing housing list which, bearing in mind local land prices, clearly wasn’t going to be solved by the private sector alone.

The initial project completed with CIP was a site purchased through the open market which achieved policy-compliant levels of affordable housing, at 40%. Since then, several projects have focused on sites already owned by the Council, delivering 100% of the new homes as Council homes.

Two further schemes, for which Carter Jonas achieved planning consent, will not only deliver 100% council housing but will be constructed to Passivhaus standards. They include wheelchair-adapted, family homes, electric vehicle charging points and generous cycle storage. These schemes also meet ambitious biodiversity goals, typically achieving a minimum of 20% biodiversity net gain ahead of the legal requirement coming into force.

These schemes exemplify the benefits of the public sector retaining an interest in its land, to the benefit of local residents. Furthermore, Cambridge City Council has an unrivalled insight into its tenants’ needs and is uniquely placed to communicate effectively with tenants and help deliver the type of housing most in need.

Complementing this, the private sector provides the skills to navigate the planning system and advise on appraisals, construction schedules and the many technical issues.

Councils must also respond to social and environmental issues and Cambridge, one of the first councils to declare a climate emergency, must be seen to be leading the way in order to make this a requirement of the private sector.

CIP has responded very positively to this climate emergency and places significant attention on delivering energy-efficient and sustainable developments, consistently exceeding policy standards for energy and water consumption.

The CIP projects have been very successful, all receiving planning permission at the first attempt. The model is proving very successful and combining the knowledge and insight of the Council with the expertise of its development partners is resulting in a very timely and positive uplift in the delivery of affordable housing.

With the CIP model now being rolled out in neighbouring South Cambridgeshire, led by the same teams at Hill and Carter Jonas, this success is likely to be replicated more frequently elsewhere.

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