Planning matters

We are now well into the consultation period following the publication of the Mayor’s “Towards a New London Plan” In that time there has been much excitement and discussion around some of the most significant challenges facing the New London Plan, not least how achieve the c.88,000 homes per year and what it means for the Green Belt. This was expertly covered in this Lichfields’ blog.

Alongside some of the overarching questions around increasing housing supply, location and delivery, I have been particularly interested in what this means for the alternative forms of housing or ‘residential alternatives’ as they are sometimes known.

This blog will consider the Mayor’s thinking about the significance of residential alternatives in meeting the lofty housing targets and what it may mean for the future of these sectors. It is clear from the outset that there are as many potential risks as there are opportunities in the consultation document and I explore these below.

I should note that there are various definitions as to what constitutes a residential alternative but, for the purpose of this blog, I will be focusing on co-living, student accommodation and BtR and use the term to cover all three.

Lichfields has seen significant growth in the co-living, PBSA and BtR sectors in recent years. It is clear to us that these residential alternatives have an important role to play in meeting London’s acute and diverse housing needs, particularly around the speed of delivery, but what can we expect from the new London Plan…

 

Residential alternatives have undoubtably been leading the way in terms of planning applications for new residential development in London for the last few years.

The GLA does not currently distinguish residential alternatives as part of its monitoring of residential applications, starts and completions. The Housing in London report published in November 2024 showed the importance that the Build to Rent sector makes towards housing delivery in London, but there is no comparable data on co-living and student accommodation. This makes tracking the trend for these applications more difficult and the contribution these typologies make towards housing delivery in London is not officially quantified.

However, anyone working in the sector knows that the delivery of conventional housing schemes in London is increasingly challenging and more investors and developers are focusing on student housing and co-living. This is certainly reflected in the demand for Lichfields’ services and numerous agents reports show increased investor and developer appetite in the sector. It is also apparent in the types of applications which the Mayor is choosing to call-in at Stage 3. In the last six months, the Mayor has called in three schemes which comprise student accommodation and earlier this month approved 7 Brannan Street at the public hearing, citing the contribution towards housing need and affordable housing. Undoubtably alternative forms of residential make an important contribution towards London’s housing supply, particularly when conventional housing delivery has been flat.

The Ministry of Housing, Communities and Local Government (MHCLG) analysis of planning pipeline data also identified that build out rates are 30% to 60% faster on projects which incorporate an element of Build to Rent compared with non-BTR projects. Therefore, not only does Build to Rent have an important role to play in delivering homes in London, it can also do so quickly which will help address previous shortfalls.

The current London Plan is generally supportive of residential alternatives with an individual policy for each (co-living, student accommodation and BtR). In addition, London Plan Guidance on co-living and student accommodation were published in 2024 and this emphasises the important role these typologies play in meeting housing needs and supporting mixed communities and the economy. These policies, LPGs and importantly how they were being applied at the borough level, were analysis by Lichfields in this insight, blog and insight focus.

So London Plan policy, guidance and recent call-ins by the Mayor clearly support residential alternatives and the number of applications and developer interest is increasing. The document recognises that the London Plan is being produced at a time when challenges in delivery remain and arguably the support for alternative forms of residential becomes ever more important. In this context, will the next iteration of the London Plan continue to provide positive support, seek to increase the emphasis placed upon the sector or do something else entirely?

Alongside the other key topics relating to residential delivery, the consultation document has a specific section which focuses on student accommodation and ‘other forms of shared housing.’

The section starts with a balanced review of the sector identifying many of the key planning issues relevant at the policy and development management stage. This includes the balance with family housing, quality, wider contribution towards to the economy and how in some places alternatives take up the majority of development capacity with ‘few other forms of housing coming forward.’

To address these issues, the document suggests that the London Plan could help address this balance of housing types and puts forward the example of applying borough targets or a requirement for site allocations (noting that the London Plan cannot allocate sites itself). Or alternatively, leave it for Local Plans to balance alone. These suggestions have significant and wide ranging implications, particularly in the context of the current London Plan.

Most noticeable is the suggestion of the requirement for site allocations. In theory this could appear to be a sensible approach as it would allow for local authorities to undertake an appropriate assessment of PBSA and co-living need and identify specific requirements through the Local Plan process, much in the same way as conventional housing or affordable homes.

However, in practice this could run the risk of slowing down or limiting the number of these schemes which come forward. We know that the Local Plan process is slow and unlikely to be able to respond sufficiently quickly to allow the necessary number of site allocations to be identified in the short term. Furthermore, many of the schemes which are brought forward are not necessarily of a scale which would ordinarily be covered by a site allocation. How would, for example, the retrofitting of outdated office buildings for co-living, an increasingly popular option for the sector, be delivered? One area which could benefit from this site allocation approach is in large scale regeneration schemes or Opportunity Areas. Lichfields is of the view that student accommodation and co-living could play a key role in these larger development schemes, particularly in the creation of mixed and balanced communities.

It is also noted that the early call for sites (LAND4LDN) did not allow sites to be defined for alternative residential typologies, so there may be an unknown pipeline of sites which require a further call for site.

Nomination Agreements are a key part of the delivery of student accommodation schemes. Lichfields’ recent research identified that of the c.50 PBSA schemes reviewed, 80% had an agreed nominations agreement in place.

The consultation document suggests that these nominations agreements could create a barrier to delivery, because of the commercial risks involved and presents the idea that nomination agreements may be best suited to just the affordable student accommodation element of a scheme.

This would be a significant shift from the current policy. Firstly, the suggestion recognises the role student accommodation has to play in meeting need and could make the delivery of speculative PBSA schemes a lot easier. What is not clear is whether this suggested approach would operate in conjunction with the requirement for local authorities to identify targets and site allocations. It is also the case that many Local Plans already require a nominations agreement so there would be a transition period whilst these plans are updated to reflect the London Plan policy.

Affordable housing in co-living and PBSA schemes has changed in recent years. Policy H16 advocates the delivery of a payment in lieu for co-living scheme, but Lichfields’ research found that more than half of schemes provide on-site affordable housing either as conventional C3 housing or discount market rent. Similarly, many PBSA schemes are providing conventional affordable housing on site and in some case, such as Southwark, policy does not require nominations agreements where this is the case.

The document continues to advocate the ‘threshold approach to viability’ but discusses reviewing the specific thresholds to ensure that they provide the right incentives to support affordable housing needs and delivery. It goes on to state that this includes identifying where some types of development are very challenging to deliver. With specific reference to student accommodation and co-living, the document questions what the affordable housing ask should be and how much should be general affordable housing and how much affordable student or co-living housing.

At this stage, it is clear that the GLA is seeking evidence on routes to deliver more affordable housing rather than putting any suggested alternatives approaches, or indeed thresholds, on the table. In the current challenging market the provision of affordable housing in residential schemes, including residential alternatives, is one of the most significant issues. Therefore, ensuring that the policy is sufficiently flexible, particularly considering the timescales associated with a new London Plan will be key. In the case of alternatives, there are pros and cons in the delivery of conventional affordable housing and discount market rented homes and it would be prudent to not restrict either at the strategic level.

The document continues to reflect the London Plan’s current support for Build to Rent housing as key to the delivery of new homes. This is particularly in the context of reduced demand for buying market homes which is significantly constrained by affordability.

The document seeks views on whether the minimum limit of 50 units which the London Plan currently defines for Build to Rent schemes is still applicable. It also suggests that the definition (currently within Policy H13 of the London) could be expanded to support other types of development and increase supply. It is not clear what is meant by the expanded definition or whether the intention is to make the definition less onerous to enable more schemes to comply with the policy.

It is positive that the document recognises that Build to Rent has a role to play in homes for ‘intermediate housing need’ which is often overlooked in favour of other housing tenures, particularly social rented. However, we would suggest that there are some areas where the document, and indeed the future iteration of the London Plan could go further. As set out in Lichfields’ Planning for Rent research, there are some recommendations which would significantly assist the delivery of Build to Rent homes, which are not addressed within the consultation document. These include strengthening the London Plan to require Local Plans to positively plan for Build to Rent and give greater differentiation in the applicable development management policies.

The recognition of alternative forms of residential in the document is welcomed and there is a lot of potential within the questions being asked within the consultation document, particularly in the context of a radically different residential market compared to that which existed at the time of adoption of the last London Plan. Residential alternatives have come of age and these products will continue to play a significant role in the delivery of homes for Londoners over the Plan period. The London Plan also has the ability to set the tone for authorities to recognise their importance.

It is therefore critical that the policies and guidance within the New London Plan continue to support and promote residential alternatives and ensure that schemes can be brought forward in appropriate locations. Whilst not being specific at this stage, the document does raise a number of questions which could significantly impact on the ability to deliver student, build to rent and co-living schemes. Therefore, it is important that the sector engages in the process to ensure that the policies provide the necessary flexibility and support.