On Thursday night, I took part in the NLA’s New Ideas for Housing Pecha Kucha event on behalf of the Appropriate Housing group. I, alongside the other speakers, was asked to present an innovative idea that could help to deliver the housing London needs.
Many of the solutions presented focused on the supply of housing, with offsite construction being a popular topic. Other themes included housing for older people to encourage downsizing, adaptable multi-generational living and live-work developments, and, more radically, building housing beneath disused railway arches. Instead of focusing on supply, Appropriate Housing have been tackling the often politically ignored land demand problem, and have been developing an alternative method for valuing land.
An insatiable appetite for debt has generated a huge demand for land in London, which along with its inherent scarcity gives it such high value, meaning landowners can command extortionate prices, often without taking on any of the risk involved in its development. This has been compounded by quantitative easing, which has kept interest rates low, contributing to overly inflated land costs.
Whilst a six minute, forty second presentation can only really scratch the surface of the issue, what it aimed to make explicit was the disproportionate amount spent paying for the land and covering the developer’s profit, and how the amount of interest paid on a mortgage could cover the build cost three times over.
We hope to capture some of the increased land value to invest in better quality housing. The unique point about the Appropriate Housing model is that it relies on co-ownership with the land owner, who gains a long term income by offering shares in their land to future homeowners ('settlers'). Essentially, the landowner becomes the mortgage lender, or shared equity partner for the land portion of the development, and the barriers to entry to secure tenancy for those struggling to save a deposit are removed, by allowing access based on salary rather than available deposit.
We value the land by linking an appropriate level of development on a site to local salary levels, over a fixed period. The land is converted to shares at the beginning of the project, at the original land value. The value from planning permission can be funnelled into the project value, rather than towards developer profit, and settlers and landowners can be involved with architects at the design stage.
With this model, we’re pointing to an ideology shift. Part of this is fractional ownership, which is nothing new – rented tenures with more security, such as in Germany, allow the kind of mobility which is essential to encourage dynamic economies. Leasehold underpins many of the emerging models for affordable co-ownership and community-led housing initiatives.
It’s about sharing as well as patience. Patient financial participation by landowners and investors places a value on the long term social and fabric performance of the settlement, changing the design objectives from ‘aspirational’ to ‘appropriate’. As stakeholders in the model, home occupiers gain meaningful agency and stability; landowners acquire a level of stewardship; and architects become enablers from the point of project definition. By replacing speculation with participation, ownership with membership, asset with liability and by considering land and professional services as equity, we can achieve housing which is more appropriate for the end user.