Metropolitan response to London Housing Bank consultation Metropolitan welcomes the opportunity to comment on these proposals for a London Housing Bank. We believe the Housing Bank could provide a valuable means of increasing housing delivery in London, but suggest greater flexibility is needed in the proposed model. 1. About Metropolitan Metropolitan is a leading provider of integrated housing services, care and support and community regeneration. We manage over 38,000 affordable homes for rent and sale, along with a range of care and support services. In total we service over 80,000 customers across London, the East of England and the East Midlands. Metropolitan is a member of the National Housing Federation and the g15, which represents London’s 15 largest housing associations and houses one in 10 Londoners. We are a member of London First, the business membership organisation which aims to make London the best city in the world in which to do business. 2. Metropolitan’s work meeting housing needs of Londoners As a member of the g15 group of London’s 15 largest housing associations, Metropolitan has a core interest in meeting the housing needs of Londoners. Metropolitan is already playing a key role in delivering more homes for Londoners. We have set out two examples of our work below. The Clapham Park estate is a large housing estate in Lambeth, London. The estate is currently undergoing a major regeneration following transfer from Lambeth Council to Metropolitan in 2008, based around a project plan developed by Lambeth, Metropolitan and the local community. The regeneration of the scheme will increase the number of homes from around 2000 to over 3000, with 1,800 refurbished or new build homes for rent and shared-ownership and 1,400 homes for open market sale. Alongside delivering more homes, the regeneration will provide space for shops, restaurants and other commercial and community services, as well as significantly improving the quality of the environment through landscaping. With our development partner Barratt homes, Metropolitan is now starting the next phase of a major development in West Hendon in Barnet. This new

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phase will deliver 74 affordable rent homes, and will eventually form part of a 2,000 unit development, including 500 affordable homes split between rented and shared ownership. Alongside delivering homes and services for our residents, Metropolitan is also looking to align our care and support services more closely with our housing offer. In doing so we hope to be able to provide affordable high quality homes to residents alongside support and care services to residents and other members of the public who need them. We look forwards to working with the GLA, the Mayor, local authorities and NHS commissioners across London in delivering this. 3. Comments on the bank Key points

• Metropolitan supports the principle of London Housing Bank, which we believe could provide a valuable means of boosting housing supply.

• Metropolitan has concerns that restrictions on the tenure of homes delivered through the Housing Bank may mean registered providers are unable or unwilling to come forwards with potential developments. We also feel the Housing Bank’s lending capacity of £200 million is limited.

• Metropolitan welcomes the flexibility the GLA has proposed regarding disposal of properties once the loan has been repaid. Whilst we think these proposals could support the development of portfolios of private rented properties, the GLA should not police the extent to which providers opt to do so.

Responses to questions in section 3 Metropolitan supports the principle of a London Housing Bank and the additional funding to support homebuilding which it could provide. Given restrictions in grant funding, providing registered providers (RPs) with competitive borrowing options could accelerate the delivery of homes and contribute to additional housing supply in London. However, we have some concerns about the scale of the Housing Bank and also some of the restrictions in these proposals, in particular the inflexibility of tenure options for homes built with Housing Bank funding. We are also

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uncertain as to how the GLA will assess and police whether homes are additional to those that would otherwise be delivered. Whilst we acknowledge the GLA is seeking further funding from DCLG for the bank, the current funding of £200 million is insufficient to deliver a step change in the delivery of homes. It is likely, given development costs and the minimum scheme size; the Housing Bank will only be able to fund 10-20 schemes across London. We would encourage the GLA to pursue its discussions with DCLG and provide further clarity on additional funding which may be provided to support the Housing Bank. Metropolitan has concerns that the strict guidance on the tenure of homes delivered via funding from the Housing Bank will mean RPs are reluctant to come forwards with eligible schemes. Many RPs with developments of a scale that would be eligible for lending from the Housing Bank may already have agreements with local authorities or developers about the tenure of the properties in these developments. Reneging on these commitments may be impossible, unfeasible or undesirable. Giving greater flexibility to RPs over the tenure of homes delivered via Housing Bank funding, perhaps allowing a proportion of homes to be delivered as low cost home ownership, could allow more RPs come forward with potential developments. Allowing a proportion of homes to be delivered as Low Cost Home Ownership will also support delivery on Mayoral priorities on delivering more shared ownership homes as well as meeting existing local priorities and commitments around tenure. As indicated above, we are uncertain as to how the GLA will assess and police whether homes delivered via Housing Bank funding will be additional. Phasing and funding of development is complex and the Housing Bank is only encouraging faster delivery of homes already planned, not delivering more homes. We would welcome further clarity from the GLA regarding how this area will be assessed and policed. Metropolitan would support using this funding with s106 planning obligations if this will accelerate delivery of schemes. However, greater flexibility over tenure of homes delivered by the Housing Bank would be required, given s106 agreements will have existing agreements over the tenure of properties to be delivered.

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Responses to questions in section 4 Metropolitan believes the GLA should be adopting a fixed rate for calculating the level of the loan. We feel 30% would provide sufficient incentive to encourage providers encourage interest from RPs in the loan. However, most commercial providers of development finance will lend up to 60% of total scheme costs and the Housing Bank may need to more closely replicate, if not improve on, the available commercial facilities. We support the GLA providing both a fixed interest rate and an equity loan option and would welcome a light touch approach to any equity loan. A rate of 3.5% would make a fixed rate option attractive, as would providing flexibility in how the loan can be repaid. We believe paying the loan upfront would make lending from the Housing Bank an attractive option for RPs. Metropolitan believes Housing Bank funding may provide an opportunity for providers to build up a portfolio of private rented homes. However, the decision of a provider to enter the private rented market at scale will be based on a number of factors, including their current portfolio, borrowing and business plans. Given this, there may not necessarily be alignment between those providers who have eligible schemes and those who wish to engage with private rented market. One of the key benefits of these proposals is the flexibility which providers have regarding disposal of assets after repayment of the loan. It is important that this flexibility is maintained and the GLA does not police whether the Housing Bank has led to an increase in RP owned market rented housing or use post-repayment tenure as an additional criterion in considering eligibility of schemes for Housing Bank funding. Responses to questions on section 5 Metropolitan sees potential benefit in commissioning a certain number of sites and encouraging the Housing Bank’s application in those areas. We would encourage the GLA to work with local authorities and other public bodies in finding public land where Housing Bank funded developments could take place. Metropolitan understands the GLA looking to specify a site size for developments funded through the Housing Bank. However, we are concerned that a minimum size of 250 may mean that many RPs with smaller, but still large schemes, or schemes where they have pre-existing commitments around tenure may be unable to access Housing Bank lending. We suggest

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the GLA consider a lower minimum size of 150 units as well as allowing RPs greater flexibility regarding the tenure of homes they deliver. Metropolitan looks forward to continuing to work with the GLA, the Mayor and local authorities within London in delivering more homes for Londoners. If you would like any further details on this response or Metropolitan’s work, please don’t hesitate to contact us: Chris Quince, Public Affairs Manager; chris.quince@metropolitan.org.uk, 0203 535 4383. Metropolitan, May 2014

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