At next month’s MIPIM property industry conference, the Legacy Foundation, a charity founded by footballers Rio Ferdinand, Mark Noble and Bobby Zamora, will be launching plans for its first scheme: 1,300 rented homes in Houghton Regis, near Luton. And they’re hoping this project will be the first of many.
The vision is admirable: the football stars want to provide social and affordable housing for key workers and low and middle income families across the country, with community facilities ranging from sports academies to subsidised on-site crèches – and they indicate that in future schemes, they could look to include schools, doctors’ surgeries, and more. The homes will all be managed by the local authority, with a 45:55 split between social and private accommodation on the Houghton Regis site.
Our interest was piqued by the scheme because it takes a different approach to the conventional housebuilding model – and we increasingly think breaking out of the norm is the only way to get the homes we need built. The usual model of building homes in this country involves developers competing to outbid each other, offering huge sums of money just to secure a site. In order to offer the most money to the landowner, they have to drive down all other costs – and as a result the space, quality and affordability of homes are all sacrificed. In contrast, Legacy are taking a long term approach, looking to match patient investors with local authority landholdings.
For this project, Legacy are partnering with Central Bedfordshire Council and Aviva Investors to secure the local authority-owned site on a long term leasehold basis, with development costs funded by private investment. Once the development is complete, the local authority will rent the homes to local families, paying a proportion of the rental income on to the investor, while retaining the remainder of the income to spend on public services. Once the investors have been paid back, the homes and their rental income stream will belong entirely to the local authority. And Ferdinand, Noble, and Zamora have committed to put in £300,000 of their own money each year, to pay for management costs. Of course, this particular element of the plans could be difficult to replicate without star backers – but the investment model could and should be used more widely.
It sounds contradictory – but by taking a long term approach to development, Legacy and their partners should be able to deliver better homes than the norm, more quickly. By leasing the land from the local authority, the development partnership aren’t sinking all their cash into acquiring a site – or borrowing cash to do so and incurring finance costs. And with the funders looking to derive a long-term return on their investment rather than the short term return on capital sought by conventional housebuilders, the homes can be built out and let more quickly. Funders having a long term interest in the final scheme also drives quality – because they are more accountable to the local authority and residents. And with a commitment to childcare and leisure facilities, ongoing management, and even football coaching for kids living in the new homes from the stars themselves – hopefully the result will be a thriving new community.
We look forward to hearing more – and hope that other forward-thinking landowners and investors follow in their footsteps.
