We undertook this research project with the aim of gaining a more detailed understanding of the potential for estate densification in London. The outcome is a report that combines spatial analysis to assess the theoretical potential for densification, with financial modelling setting out how the viability of estate densification stacks up.
Our spatial analysis highlighted the following findings:
Within the four boroughs studied, it is generally not the case that large estates are any less dense than their surrounding wards, and a quarter of all large estates in the boroughs sampled are already at or above the upper bound of the central density setting. This is not to say that densification is not justified, but it should be noted that in many instances, densifying estates would mean rebuilding at a substantially higher density than the surrounding area.
Nonetheless, London Plan guidance for new build housing density suggests that there is significant potential for estate densification to add to London’s housing supply. We estimate that across London, between 80,000 and 160,000 new homes could be added London’s housing stock.
However, it would take an estimated 10 years to start to tackle all the large estates, and a minimum of another 10 years to complete each project. We estimate that estate densification has the potential to add between 4,000 and 8,000 homes a year – up to 20 per cent of London’s annual additional housing target.
Given the capacity for estate densification identified in this report, it is important that it is featured in the new London Plan.
This should include a full analysis of where London’s existing large estates are, and their current densities. It is apparent from estimates made in a number of reports that the supply potential of estate densification has sometimes been exaggerated.
Estate densification may be justifiable on the grounds that having a single land owner may make the process more straightforward, but not necessarily on the basis that these estates in their current form use land any less efficiently than their surrounding neighbourhoods.
As a result, the Mayor should continue to identify the potential for estate densification, while further exploring potential for densification on alternative land uses such as privately held residential land and publicly held land like car parks.
A sensitivity analysis shows that the most significant variables impacting viability are the before- and after values of the housing stock, the potential for increase in density, and the tenure mix at the beginning and at the completion of the regeneration.
The financial modelling included in this report demonstrates that many densification projects on large estates require some form of government subsidy. Viability is particularly difficult in estates with low density, and in the suburbs, where high proportions of Right to Buy properties have increased costs. The provision of sub-market housing also has a significant impact on the viability of projects. In short, if we want to use estate densification as a means of creating additional homes, a proportion of which are at sub-market prices, investment is required. In their current form, the loans provided by central government via the Estate Regeneration Fund are not sufficient.
If estate densifcation is to both deliver additional units and ensure provision of sub-market housing in such situations, more grant funding is required. In such cases, we recommend that projects are supported by a programme of gap funding. This could be a combination of central government grant, housing association crosssubsidy, private fnance through stock transfer, and local authority contribution.
While this report has not focused on community consultation, this remains a hugely important part of the estate densification process. We welcome the Mayor of London’s commitment to produce a charter 53 for good redevelopment.
We recommend that the Mayor should work with resident groups, as well as the broader community, local authorities, and developers in doing so. These guidelines should focus not only on community engagement, but also on the full and transparent costing of projects prior to this consultation process. This would ensure that all parties are entering discussions with as much knowledge as possible about the costs and benefits of estate redevelopment.
As was noted earlier in this report, the redevelopment of large estates primarily on the basis of densification rather than regeneration (the aim of the latter being to reverse stock decline and improve the socio-economic exclusion of residents) is a new phenomenon in public policy. It is also a policy development largely confined to London, where the need to increase the housing supply is at its most acute.
This report has shown that the potential for estate densification is significant (though maybe less dramatic than some commentators have suggested); and that realising this potential requires a step change in the funding of such projects.