Delivering low to medium-rise residential schemes in London
What are the biggest constraints to delivery?
The need for new housing in London has never been greater. However, delivering low to medium-rise residential schemes comes with significant hurdles, from planning constraints to financial viability.
Local authorities face immense financial and logistical pressures. Many Housing Revenue Accounts have reached their headroom limits, leaving little capacity for new builds. Temporary accommodation costs are creating a huge burden for councils, forcing them to focus on survival rather than long-term investment in future stock.
Council attendees highlighted the growing skills’ shortages within local authorities, particularly in planning. A lack of planning officers means that projects face delays, preventing much needed homes from being delivered. Without this expertise, councils are struggling to act as effective custodians of place, despite their ambition to take a long-term approach to housing.
Councils are the custodians of place and should take a long-term view, but they’re currently trapped in a cycle of firefighting, struggling to make do with limited resources.
The Government’s recent Planning and Infrastructure Bill looks at shifting the emphasis of decision making from councillors to planning teams which could exacerbate these pressures.
Kier outlined that delivery is often constrained by complications that require technical construction solutions.
For example, attendees highlighted the increasing risk of flooding as a barrier to delivery, as well as utility diversions and enabling works. These complexities add further pressure to achieving cost certainty for schemes.
My primary concern is how we can return to a more cost-effective construction market. How do we share risk? Local authorities are severely understaffed and operate on razor-thin margins. We need private sector contractors to step up and help us. How can we collaborate to deliver better value for money. It's difficult for local authorities to take a long term-view on investment when day-to-day budgets are squeezed. You can take somebody off the housing waiting list by building a flat but, in reality, the demand for Council housing and temporary accommodation still grows.
Also discussed were the various forms of contracts and the importance of a clearer framework for risk, noting that risk profiles can often prevent councils from seizing opportunities. This includes engaging with the government’s target of 1.5 million new homes and the redesignation of greenfield sites to greyfield.
Rising construction costs are another concern, with attendees highlighting the need for earlier contractor involvement to assist with budget management to prevent projects becoming unviable due to construction costs.
However, discussions also highlighted that, with the right support and strategic planning from the private sector, councils can shift from reactive crisis management to proactive housing delivery. By adopting a balanced approach to risk - where both public and private partners share responsibility - sustainable solutions can be achieved to meet London’s growing housing demand.
Yes, they need to be bolder in decision-making.
No, risk management is essential.
A balanced approach is needed.
Retrofit and temporary accommodation costs are constraining local authorities, limiting their ability to invest in new builds. Many Housing Revenue Accounts have maxed out their capacity, so there's a risk we're just trying to survive with what we have when we know we need more homes and more quickly. To move forward, we need to build high-quality, environmentally-friendly homes to avoid past mistakes by building in resilience and increasing new home stock to make our HRAs more financially sustainable
We're also facing a shortage of planning officers and a significant skills’ gap in the construction sector. Despite these challenges, there are opportunities: the government is committed to build 1.5 million homes so new house building has become a priority, changes to the National Planning Policy Framework to make planning consents more achievable and the new designation of greyfield sites opening up more land for development. However, we are still faced with the reality that our infrastructure is broken, and this is hampering housing delivery particularly from a viability perspective.
One in 21 children in London are homeless (Source: London Councils)
London Boroughs are spending an estimated £4m per day on temporary accommodation. That’s over £1.6bn per year. (Source: BBC)
Councils have had a 27% real-terms cut in core spending power since 2010 (Source: LGA)
In 2024, London experienced the highest rent inflation in the UK at 11.5% (Source: ONS)
Ronke Akingbade of Be First said that in order to solve the housing puzzle, open and transparent conversations are needed to ensure risks are identified earlier and the client is aware of the costs of moving forward with the project.
We welcome anyone who can help us complete the puzzle. Currently, we lack architects, planners, infrastructure experts, and contractors who are willing to identify risks early and advise the Client on the costs of moving forward with the project. We need someone to step up and say, 'These are the risks’ and identify the costs, so the Client can go into the project fully aware that they might have to fund the risks if it comes up. It's crucial to bring all these elements together in order to move forward.
“Contractors can help solve issues that councils face – but only when we have open and transparent conversations with each other. There can be a fear from contractors that we might not address the real challenges councils face when submitting tender responses, because we simply don’t know. Conversations like these are key to providing genuinely valuable solutions.”
Alexandra Smith, Senior Business Development Manager for Kier Construction, London and Thames Valley
Kier is delivering 93 new homes in east London in the latest phase of London Borough of Hackney’s exciting masterplan for its Colville Estate. An expansive mixed-use renewal project that includes 925 homes in total, the wider Colville Estate redevelopment is one of the biggest and most ambitious regeneration programmes in the council’s history.
Being built over seven phases, the regeneration will replace over 430 existing homes that were no longer fit for purpose with new, affordable Council homes, a range of civic amenities and public realm which connects the estate to the wider borough.
Delivered across two plots, the scheme will provide 52 social rent homes for returning residents and local residents in housing need, which are funded by the Mayor of London’s Affordable Homes Programme, 19 affordable shared ownership homes for people living or working in Hackney, as well as 22 privately-owned homes.
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