A group of developers and investors are calling on the mayor of London to revamp the London Land Fund to unlock some £1bn in investment into housing.
A revamp of London’s land fund with co-investment from the private sector could deliver to some 20,000 homes in the capital, the group says.
Chaired by Liz Peace, developers working with London First and PwC are calling for action from the Greater London Authority to tap into investor demand in the capital.
The current land fund combines £250m in GLA money with £486m government backing to invest in buying and preparing land for housing. When land is sold the receipt is recycled into the fund. To date it has committed to eight major projects, including a £42m for Peabody’s acquisition of Holloway Prison.
Following approval from Sadiq Khan to market-test new opportunities a year ago, the group has put forward a plan create a new land fund incorporating commercial investment to double the number of homes delivered in a 10-year period.
Peace said: “The land fund was a good idea to boost the number of homes developed for Londoners but its impact was always going to be limited by availability of funds.”
She said the group of private sector housing interests was focused on “working together with the GLA to identify concrete ways of boosting the fund through private sector participation”.
The group is calling on the GLA to step up and provide clarity over the land fund structure, tangible investment opportunities and potential providers, and a clear investment strategy.
A report from London First and PwC detailing the opportunity of Land Fund 2 works up a potential scenario with £1bn in co-investment. This would rely on the £250m GLA contribution to the current fund with monies available to equity investments on a 1:1 leverage model with a five-year time frame and 1:3 leverage for 10 years.
The model would follow similar approaches to the English Cities Fund, which brings together equity from Homes England, Legal & General and Muse, with debt from Barclays or the Mid-Market Rent Fund from PfP Capital and third parties with investment from the Scottish government.
James Bailey, director at PwC Deals, said: “The London land fund offers a great opportunity for the GLA to leverage its assets and unique capabilities to attract private sector co-investment into housing and stimulate a sustainable post-pandemic recovery.”
Jonathan Seager, executive director for place at London First, added: “The pandemic has pushed the capital further behind its housebuilding targets, making it critical that new ways of bringing forward development are quickly harnessed.”
A spokesman for the mayor of London said: “The mayor’s Land Fund is a pioneering programme which has given City Hall a new proactive role in buying land to deliver more of the genuinely affordable homes Londoners deserve.
“The Mayor’s Homes for Londoners team will read this report and respond in due course.”
To send feedback, e-mail emma.rosser@egi.co.uk or tweet @EmmaARosser or @estatesgazette
