“You really get the measure of people when things aren’t going well.”
For Adam Lawrence, chief executive of residential developer London Square, recent months have been a challenge. The aftermath of then-prime minister Liz Truss’s mini-budget, rocketing inflation, rising interest rates and ever-shifting government policy have tested the mettle of businesses and business leaders across the built environment. But Lawrence, who set up London Square in 2010 after 15 years with Barratt Developments, sees a sector standing its ground.
“What I have been pleasantly surprised about is the hard work and commitment that I have seen out of planning officers, local authorities, City Hall, in trying to maintain the delivery of housing despite all the policymaking challenges that are being thrown at the delivery of housing,” Lawrence tells EG. “Central policy-making is basically just trying to put a wrecking ball through delivery.”
Much of Lawrence’s focus in this combative market is on Square Roots, an affordable housing offshoot of London Square that launched in 2021 and was given for-profit registered provider status last year.
The company now has 1,000 affordable homes under construction across six London boroughs, with more than £500m invested. “That’s raising people’s eyebrows,” Lawrence says. “There are RPs registered years ago that still haven’t delivered a single unit.”
New capital
Square Roots is one of a relatively small but growing number of for-profit registered providers of social housing – as of early February, 69 of the 1,600-plus registered providers were for-profit, with seven registrations in 2022, including that of Square Roots.
In a 2021 report, Savills estimated that for-profit RPs could invest as much as £23bn to fund 130,000 affordable homes by 2026. That level of activity should be particularly attractive to the near £3tn of pension wealth looking for a home in inflation-linked income, the agency said.
Square Roots wants to secure £1.5bn of funding to deliver 3,500 affordable homes across the capital over the next five years. The business – which has a separate board, chaired by former Homes England interim chair Simon Dudley, and a governance set-up distinct to London Square, led by managing director Barbara Richardson – is drawing in capital from institutional investors. It is also working with the GLA as an investment partner, securing £13.6m of grant funding for its first three projects. “We are knocking on the door more and more and more,” Lawrence says.
Rather than bidding for developers’ section 106 quotas, the company is hunting out land opportunities itself and then developing schemes with the expertise of the broader London Square group. “What it is doing is completely accretive,” Lawrence says. “It is bringing in new capital that otherwise wouldn’t be building true affordable housing.”
He adds of the wider group’s “one-stop shop” approach to schemes: “We are applying all our entrepreneurism into finding opportunities… We can get a lot more rubber on the road quicker – we can find opportunities, review those opportunities. There’s a lot less friction in our process. A developer has to buy a site and he wants a return. The contractor has to build it, they want a return. The [not-for-profit] RP want to pay for it but it needs a surplus. There are a lot of inefficiencies in that model that we have cut out.”
Schemes under way include two in Kingston-upon-Thames – with 52 shared-ownership flats close to Richmond Park launching in April, ahead of a 125-home site near the town centre; 141 affordable rent and shared-ownership homes in the final stages of construction on Silver Road in Lewisham with backing from Federated Hermes’ Hestia; and a 244-home scheme in Barnet. Other projects include developments in Tower Hamlets, Bexley and Bromley.
Rapid growth has shifted how the market views a broader business once known only for its for-sale schemes, Lawrence says. “The perception of London Square has changed slightly, and the discussions we are having more recently about delivery of affordable housing means people do look at us through a slightly different lens,” he says.
Do it differently
And not just because of the affordable housing. Since launching the company, Lawrence has set up London Square Developments, its private for-sale business; London Square Partners, which works with the public sector; London Square Works, which develops workspace at its mixed-use schemes; and London Square Living, a nascent build-to-rent arm.
Lawrence knows his industry peers elsewhere in the country are worried about local authority housing targets becoming advisory rather than mandatory, and the impact that will have on delivery. As a London-focused business working alongside the GLA, he is less concerned. But changing government policies and legislation in other areas are nonetheless creating uncertainty – and hampering companies’ ability to plan effectively.
“Look at how the Fire Safety Act has become politicised,” he says by way of example. “We have to do something different and we have to make buildings safer. That is absolutely the right thing to do. But you have to be clear about how you are going to transition from where you are to where you want to get to. If you are building an 18-storey (77m) building or a 30m building, you have to think these things are [coming] in the process, they don’t happen overnight. You have to think about what happens in the middle.”
He adds: “We have had building standards come through before and government has been very good in giving the industry line of sight and transparency of what that would look like. This has been different.”
It is a note of pessimism from a business leader who seems to more often see the glass as half-full, channelling that entrepreneurism to get things moving and get things done.
And it doesn’t take him long to get back to the positivity. He doesn’t rule out any boroughs for future schemes. “We are politically agnostic,” he says. “Some boroughs are easier to identify opportunities in than others. But I would argue that every London borough is in need of affordable housing. Our strategy is that we are a Greater London-focused developer. We have been working hard at delivering for-sale products over the past 10 years, but we know there is a need for affordable housing – and this model is attractive to capital.”
But with plenty of plates spinning – and plenty on each plate – Lawrence knows there is more London Square can do. Eventually. “We are still, in property terms, a relatively young business,” he says when asked about other segments of the living sector that he and colleagues could tap into. “We have just taken on affordable housing, we are just about to take on, in a considerable way, BTR. Let’s get that embedded. People will say, ‘well, could you do retirement? Could you go to co-living?’ You could do all of this but how much does one person want to take on?”
But if Square Roots delivers as planned, Lawrence will likely be looking to make the sums work on the next venture.
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