Can a London Bond help tackle the capital’s housing crisis?

As the capital’s housing reaches breaking point, a London Bond is bringing new investment. John Wheeler, chair of Regenerate London, explains the model.

The London housing crisis looks stark enough on paper; we are building each year only half of the new homes that we need to meet forecast requirements. A total of 64,000 new units are required, but just 26,000 were started in 2015.

The reality at street level is even more disturbing; London’s unprecedented housing shortage has consequences, and housing-induced poverty remains stubbornly high, impacting the ability of our capital to create wealth. Our businesses are struggling to recruit and retain staff because of the shortage of places for them to call home.

The media is in agreement. The Guardian recently referred to the housing crisis as Sadiq Khan’s ‘biggest challenge’, highlighting this issue as the one that Londoners are most concerned about, while City AM reported that London homes are now the second most expensive in the world.

There appears to be consensus among politicians and media alike, and in co-founding Regenerate London we are giving investors the chance to positively and profitably address the London housing crisis.

At Regenerate London we are firmly of the view that the building of new homes will not solve the crisis, unless those homes are accessible to most Londoners.

The March 2016 housing white paper called for higher density development, and we applauded a Savills report calling for the re-introduction of ‘traditional streetscapes, with mansion blocks and terraced housing, as well as towers’. We believe in a new homes legacy which will improve the lives of people in their communities.

The white paper also calls for the planning process to be made faster, at the same time dissuading developers from land banking by attaching build out clauses to permissions. It welcomes innovative solutions to offer off-site, factory-fabricated housing; like the YMCA’s Y:Cube, south London modular flats designed by Rogers Stirk Harbour & Partners (pictured) and the Container City in the Docklands.

Our business model chimes closely with both the housing white paper and the strategies called for by the mayor.

We acquire land in whole, or in part, and obtain planning consent for regeneration sites within Greater London and the home counties. We then sell the sites as development-ready projects for local builders to complete. We focus on sites which are close to large infrastructure and transport projects such as Crossrail because that is where the demand for new housing is expected to soar most.

Regenerate London has recently issued an unlisted corporate bond, which offers a fixed rate of return of 7% gross interest per year over five years, paid quarterly, with capital returned in full on maturity.

We understand that the business model we have established must be viable and be built on the foundations of strong decision-making and maximum investor security. As such, bondholders will enjoy two levels of protection; we offer a debenture over the assets of Regenerate London plc, and have also appointed NCM Fund Services Limited to act as an independent Security Trustee on behalf of investors.

I founded Regus, the serviced office operator, some thirty years ago and Regenerate London is certainly the most exciting and most passionate company that I have been involved in since, because it works on so many different levels. It tackles a burgeoning London crisis, it supports both national and London-wide government initiatives, and it gives Londoners the chance to get involved, and to make an attractive turn on their investment.