Policy H11 — Build to Rent

Policy H11 Build to Rent A Where a development meets the criteria set out in Part B, the affordable housing offer can be solely Discounted Market Rent (DMR) at a genuinely affordable rent, preferably London Living Rent level. DMR homes must be secured in perpetuity. B To qualify as a Build to Rent scheme the following criteria must be met: 1) the development, or block or phase within the development, has at least 50 units [66] 2) the homes are held as Build to Rent under a covenant for at least 15 years [67] 3) a clawback mechanism is in place that ensures there is no financial incentive to break the covenant 4) all the units are self-contained and let separately 5) there is unified ownership and unified management of the private and Discount Market Rent elements of the scheme 6) longer tenancies (three years or more) are available to all tenants. These should have break clauses for renters, which allow the tenant to end the tenancy with a month’s notice any time after the first six months 7) the scheme offers rent and service charge certainty for the period of the tenancy, the basis of which should be made clear to the tenant before a tenancy agreement is signed, including any annual increases which should always be formula-linked 8) there is on-site management. This does not necessarily mean full-time dedicated on-site staff, but that all schemes need to have systems for prompt resolution of issues and some daily on-site presence 9) providers have a complaints procedure in place and are a member of a recognised ombudsman scheme 10) providers do not charge up-front fees of any kind to tenants or prospective tenants, other than deposits and rent-in-advance. C To follow the Fast Track Route, Build to Rent schemes must deliver at least 35 per cent affordable housing, or 50 per cent where the development is on public sector land or industrial land appropriate for residential uses in accordance with Policy E7 Industrial intensification, co-location and substitution . The Mayor expects at least 30 per cent of DMR homes to be provided at an equivalent rent to London Living Rent with the remaining 70 per cent at a range of genuinely affordable rents. [68] Schemes must also meet all other requirements of Part C of Policy H5 Threshold approach to applications . D Where the requirements of C above are not met, schemes must follow the Viability Tested Route set out in Policy H5 Threshold approach to applications . Viability assessments on such schemes should take account of the differences between Build to Rent and Build for Sale development and be undertaken in line with the Affordable Housing and Viability SPG. E On schemes that propose a proportion of homes as Build to Rent and a proportion for sale to the market, Part A of this policy will only be suitable for the Build to Rent element. The scheme should be assessed as a whole, with affordable housing calculated as a proportion of total habitable rooms across the scheme. 4.11.1 Boroughs should take a positive approach to the Build to Rent sector to enable it to better contribute to the delivery of new homes. Build to Rent developments can make a positive contribution to increasing housing supply and are beneficial in a number of ways. They can: attract investment into London’s housing market that otherwise would not exist accelerate delivery on individual sites as they are less prone to ‘absorption constraints’ [69] on build-out rates deliver more readily across the housing market cycle as they are less impacted by house price downturns provide a more consistent and at-scale demand for off-site manufacture offer longer-term tenancies and more certainty over long-term availability ensure a commitment to, and investment in, place-making through single ownership provide better management standards and better quality homes than much of the mainstream private rented sector. 4.11.2 The Build to Rent Policy has been developed in recognition of the fact that Build to Rent operates a different model to Build for Sale. Build to Rent relies on income through rent over a number of years, rather than an upfront return on sales (this is often referred to as the ‘distinct economics’ of the sector). Because of this, in some circumstances Build to Rent may not be able to compete for land on an equal footing with speculative Build for Sale, as it may generate lower initial land values. Longer term, however, Build to Rent is an attractive offer to institutional investors. This policy provides a specific approach to the affordable housing offer, where the aim is to maintain the integrity of the Build to Rent development, with unified ownership and management of all the homes. 4.11.3 Where a developer is proposing a Build to Rent development which meets the definition set out in Part B, the affordable housing offer can be entirely Discounted Market Rent (DMR), managed by the Build to Rent provider and delivered without grant, i.e. entirely through planning gain. As it is not a requirement to be a local authority or a Registered Provider to deliver or manage intermediate rented homes that are delivered without grant, these units can be owned and/or managed by Build to Rent landlords themselves. DMR units should be fully integrated into the development with no differences between DMR and market units. 4.11.4 The Mayor’s strong preference is for DMR homes to be let at London Living Rent level, to ensure city-wide consistency in approach. Unlike other DMR products, London Living Rent has an advantage in that it has a London-wide electoral mandate, can be consistently understood and applied across London, can earn the public’s trust as being genuinely affordable, and will be backed by the GLA who will uprate it every year. DMR should be allocated according to intermediate eligibility criteria, which can include locally defined eligibility criteria. Where the borough has an intermediate or DMR waiting list they should agree with the applicant a process for providing prioLondon Plan Policy H11 · official source →