While the Conservative government may have reaffirmed its love affair with home ownership and building for sale at its recent party conference, it is worth remembering that at a national and local authority level, much has been done to explore new forms of public and private development.
This is especially true in housing, and particularly build-to-rent. So is now the time to recognise a new era of genuine partnership between the public and private sector?
Historically, the biggest challenges to the market have been the cost and availability of land and funding.
This was recognised at an early juncture by both the chancellor and London mayor Boris Johnson, who have spent the past five years reviewing and re-reviewing the assets of central government and the Greater London Authority to identify and bring forward public land for development.
The GLA, in particular, had some notable early successes through its Public Land Initiative, where it kick-started development on dormant sites through the “buy now, pay later” model.
This provided for a postponed charge to allow funding by senior debt. Had it not been for this deferred land payment and postponement, schemes such as Greenwich Square, on a former hospital site, may have lain dormant for years, waiting until the market fully recovered.
Spurred on by the success of the PLI and buoyed by private sector interest, the GLA extended the scheme into its Delivery Partner Panel. Despite inevitable challenges thrown up by the OJEU process, this too has provided a much-needed stimulus to the housing market.
The model pioneered through the PLI has given the GLA a number of sites and thousands of homes that it can point at to demonstrate its role in providing housing to London.
Barking Riverside, Catford Stadium and Silvertown Quays (pictured) under the DPP have all provided big local boosts in terms of both housing and employment. By and large, they have also shown the GLA acting as catalyst to development, as opposed to a bureaucratic hurdle.
It has by no means all been successful. There have been just as many gripes about similar panels not delivering enough sites – in terms of volume or quality – as there has been praise for the new wave of initiative and understanding shown by local government.
However, one thing is clear: the public sector is listening to the needs of the private sector more now than it has ever done. It understands it has a role.
Announcements at MIPIM UK by the Government Property Unit about the release of surplus public land seem to underscore the premise that it is open for business and actively encouraging dialogue with the private sector to maximise value and avoid waste. Something all too scarce even 10 years ago.
As a result, it is not just developers that are getting used to working with the public sector. Banks too have realised that having a public sector landowner on board will only add to the deliverability of a scheme, as opposed to making the step-in more difficult.
The major lenders involved in the projects above have all become comfortable having a government covenant involved alongside and a charge ranking behind. They know that such arrangements aid delivery and bring stability to a market still in need of a lift. They also know that such arrangements bring kudos.
So, with Transport for London soon to announce its panel to bring forward surplus land for development and the GLA launching further initiatives, such as the London Housing Bank – which has pre-qualified several parties for development funding – there is credence to the suggestion that we are entering a phase of unprecedented co-operation between the public and the private sectors.
Jonathan Northey is a partner at DLA Piper
