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News Release

London

Registered Providers hold the key to providing the deficit in housing that London needs

Say Jones Lang LaSalle in latest residential research


London, 29th November 2013 - In an event held this week, Jones Lang LaSalle together with Nick Jopling, Executive Director at Grainger plc highlighted the desperate need to achieve a step change in UK housing supply in a market where economic conditions are becoming increasingly favourable to a sustainable housing market recovery.  The ability of housebuilders and local authorities to achieve that change is limited, and Jones Lang LaSalle believes Registered Providers (RPs) and a new breed of developer-operators in the private rented sector (PRS) hold the key to achieving the increase in supply that we need to keep London and our other major cities equipped with the physical infrastructure to sustain economic growth. 

Adam Challis, Head of Residential Research at Jones Lang LaSalle comments: “Provision of greater volumes of affordable housing is desperately needed. To achieve this will require Registered Providers to innovate; an improving market context creates opportunities and in some respects RPs have a strategic advantage that can be exploited. This includes large balance sheets and unparalleled experience in tenant management and community building.”

The RP sector in aggregate is undervalued on balance sheets by at least £14 billion.  Moreover, analysis by Jones Lang LaSalle shows that RPs’ asset values have risen steadily through the downturn, and in some cases have shown increases between 20% and 30% in the last three years.  Jones Lang LaSalle also expects forthcoming accounting reforms, driven by the 2014 exposure draft SORP, to lead to much higher balance sheet valuations in the future.  This could create huge latent debt capacity in the sector and give RPs the opportunity to sweat their assets harder. 

The private rented sector (PRS) in the UK looks set to take-off with an estimated £5bn in funding currently directed towards the sector, with RPs amongst the first movers in this sphere along with private sector investors and developers such as Grainger. 
Commenting on the potential for RPs to play a leading role going forward,

Richard Petty – Lead Director, Affordable Housing at Jones Lang LaSalle said: “RPs have the potential to unlock enormous financial power in their portfolios and on their balance sheets.  We believe they have a moral obligation to use this to best advantage to provide as many homes as possible.  In the PRS, we see RPs holding a real strategic advantage if they choose to use it – they are the only organisations at present that combine the three essential building blocks for success: access to capital; a management platform; and delivery capability.”

To view and download the slides from the event please click here