Public land and commercial investment can drive affordable housing and workspaces

Around the world, the urban affordability crisis has been steadily deepening. In cities with open market economies, homes and small business premises are becoming increasingly unaffordable. Rapid population growth combined with expanded profit-maximizing property investment has outstripped the ability of many public authorities to plan for balanced growth and build sufficient affordable housing or workspace.

London’s population has boomed over the past 40 years from 6.9 million in 1980 to 9.6 million today and London’s small business base has doubled from around 500,000 to 1 million. London hosts 6 million jobs, £1.5 trillion housing assets and a £4 trillion property asset base. Like many other global cities, this growth has put enormous pressure on housing prices and the costs of small business space.

Transport for London (TfL), the body responsible for most of the transport network in the United Kingdom’s capital, created Places for London – previously TTL Properties – a £2bn property company wholly owned but financially independent of TfL, as a response to the affordable housing crisis. With one of the largest property asset bases in London, the company seeks to provide affordable spaces for people to live and work, investing in transport amenities and other infrastructures, including the shift to low-carbon buildings, electric vehicle charging and sustainable transport, supporting major town centre regeneration and world-class placemaking.

Fundamentally, Places for London facilitates the development of sites next to the transport network to foster a new generation of public transport users through well-planned mixed-use densification, large-scale decarbonization of the built environment and high-affordability requirements. It has identified a capacity for 20,000 homes with the ambition to start on these sites by 2031.

This formula builds upon three established traditions in successful public-interest property development:

Many public authorities own real estate in cities. However, deliberately switching the portfolio towards affordable homes and small business space near transport hubs creates a more affordable and inclusive city with greater use of sustainable public transport.

To achieve accessibility and affordability, Places for London will rebalance its portfolio over the next 10 years with significant increases in the proportion of income coming from residential and commercial office space, with commensurate falls in the proportion coming from car parking and retail.

Maintaining public ownership of land through joint ventures, rather than selling public land to the market, enables a greater impact on affordability challenges.

The business model deliberately leverages large-scale and diverse portfolio dynamics to provide a rich mix of types and tenures, benefitting from cross-subsidies, reinvestment of profits and retention of long-term public interest in the equity of the assets.

The public land and property are not sold off; they are vested in joint ventures with commercial partners. The public purpose and profit reinvestment approach allows Places for London to operate through cycles rather than to follow cycles with their stop-start dynamics that intensify affordability pressures.

Places for London is already delivering on its ambition, with 800 or more homes completed and a further 3,350 on the way.

Half of its project at Blackhorse View in North London will be classed as “affordable,” intended for those with an income at or below median levels, with similar projects planned for other parts of the capital. Places for London also initiated a medium-density scheme for the rental market in several suburban town centres.

These projects hold insights for other cities:

To rebalance and future-proof the portfolio, Places for London will continue to invest in existing commercial spaces to support over 1,500 small business tenants, mainly in retail units and railway arches – the inlets found along many train tracks in the Greater London area have typically attracted businesses. This investment aims to help revitalize town centres in a post-pandemic world.

For instance, new planning permission secured in Kilburn, north-west London, will be used to enhance the arches and create new facilities for the local small business community. Another approved project will be to transform a row of arches in west London to provide incubator space for start-ups in the food sector.

Using public land connected to transport interchanges intensifies activity around these hubs, enabling affordable homes and workspaces to be spread throughout the city, not just in less valuable locations.

Places for London is delivering high levels of affordable housing – targeting an average of 50% across its developments – and is delivering support for small businesses, prioritizing affordable workspace and incubator space. While doing so, it invests in transport infrastructure, which includes enabling step-free access for London Underground stations and providing electric vehicle charging facilities.

Places for London will lead more new development than any other company in London over the following decades with incoming affordable homes, designs driven by sustainability and improvements for the local community.