Back in 2008, a scheme on the banks of the Regents Canal in Hackney, close to Shoreditch Park, completed.
Adelaide Wharf provided 150 new homes, 75 for the private market and 75 for the social market.
Conceived at the height of the last property boom, the scheme was intended to herald a new form of housing development. The tenure-blind scheme involved private and social homes being pepper-potted indistinguishably throughout the scheme to create the first of a wave of “mixed-communities”. The wave, however, never arrived.
But less than a decade later, it seems, the game has changed. The credit crunch and attendant slowdown in housing construction and sales has meant that housebuilders’ over-riding priority is now economic viability.
The Conservatives’ victory in 2010 prompted a cut in affordable housing grant, making mixed-tenure schemes harder to develop. Housebuilders were able to cut affordable homes from proposed schemes, or provide a payment in lieu to go towards local authority off-site housing provision. In short, housing developments across the capital have become increasingly polarised.
Let’s take a look at the data to see how we got here.
Our data includes all schemes that would in effect be required to provide affordable housing. Therefore it does not include schemes of fewer than 10 units or schemes using permitted development rights.
In 2009, the market for mixed communities was fairly healthy, with mixed schemes making up half of all developments, along with 100% private and 100% social ones making up around a quarter each.
Since then, however, wholly private schemes have more or less replaced social ones. Developers that were previously building mixed-tenure schemes are now mostly building 100% private schemes. In turn, housing associations are now more likely to now be building mixed schemes using public and private money, and not 100% affordable ones built with grant funding.
As the Figure 1, above, shows, last year half of all schemes that in the past would have provided affordable housing were 100% private.
But this does not show the whole picture. Over the past few years, local authorities have also had to deal with permitted development. Take those schemes into account and the number of wholly private schemes across the market jumps from 50% to well over 60%. As expected, the percentage of mixed-tenure schemes drops from 45% to 33%.
Figure 2, also above, illustrates the impact that permitted development has had on the market after the legislation came into effect in May 2013.
Even in large schemes, which usually offer multiple tenures, particular tenures will often be segregated in different blocks. Large schemes – those that offer more than a few hundred homes – tend to benefit from economies of scale. Land values, although high, tend to be more able to cope with providing a decent number of affordable homes, our data would suggest. Developers of smaller schemes are less able or willing to provide social housing.
Figure 3 looks at schemes of between 10 and 50 units. Here the figures are even further polarised, with close to 80% of schemes completely private. Some developers cite viability as a barrier to providing affordable homes, while others agree to contribute funds to authorities’ off-site affordable housing – of which £1bn is sitting unspent in council coffers.
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