Speaking at the RESI conference last month, Theresa May’s new housing minister Gavin Barwell indicated a policy shift away from owner-occupation and Cameron’s “starter homes” initiative, and towards an increased focus on the private rented sector (PRS) to get more homes built.
Essential Living is a UK company developing, designing and operating purpose-built homes for long-term rent. Established nearly three years ago, the company’s first eight schemes will complete between 2016 and 2020, and provide c.5000 new homes across the capital. On 31 August, Future of London organised a site visit to their first completed scheme. Vantage Point in Archway, London Borough of Islington, is an office-to-residential conversion of 17-storey Archway Tower, which sits above Archway tube station. The scheme is providing 118 studios, one- and two-bed units, 100% of which are at market rent. We heard from Rob Whiting, Essential Living’s Asset Director, and viewed units and amenity spaces.
US institutional investor M3 Capital Partners put forward $200m to fund Essential Living’s PRS portfolio, providing equity to purchase sites. Essential Living acquired the Vantage Point leasehold in 2013 for £6m. Located directly above Archway Tube station, the freehold is owned by TfL, to whom Essential Living will pay 9% of their annual rental income. Both equity and debt funds have been used to fund the build; once the homes are fully let, income stream regular, and the scheme stable, Essential Living will refinance through the market.
Essential Living did not require planning permission, due to the scheme being an office to residential conversion (as set out in the Town and Country Planning (General Permitted Development) (England) Order 2015). This removed their obligation to provide affordable housing, and led to the whole scheme being market rents. Despite some dissatisfaction from the Better Archway Forum, and the council’s opposition to the PD system, the development went ahead.
Essential Living could not dramatically alter the existing structure given its location, but has improved the building’s external appearance and energy efficiency through recladding the façade and reroofing. Although converting a building has its constraints, Essential Living has successfully designed the interior for the rental market.
The apartments and communal spaces have been designed and furnished to a very high standard and the impressive views have been maximised through use of floor-to-ceiling windows and outdoor terraces. On the ground floor, Essential Living plan for a range of commercial uses, including a coffee shop serving residents and the general public. The first three floors are pet-friendly.
Amenities and Management
The high-quality amenity spaces and management exemplify the value attributed to the communal spaces, as is popular with the US ‘multi-family’ model. The property offers a 24-hour concierge, along with access to a library, business lounge, large indoor and outdoor entertaining spaces, and terraces equipped with pizza ovens and barbeques. Residents can reserve these communal spaces at no cost to entertain large groups of guests, something particularly attractive to those in studio flats.
The high-end offer is reflected in the price; the 34 studios are offered from £1,500PM, 52 1-beds from £1,800PM, and 27 2-beds from £2,600PM. Through this scheme, Vantage Point’s tenants will be on higher-than-average incomes, and those renting for convenience or as a lifestyle choice. The homes are expected to house 25-34 year-old young professionals and sharers, though older single people living alone and downsizing couples could also be interested. In contrast, Essential Living’s Creekside Wharf scheme in RB Greenwich will be targeted at a broader customer base, with its purposefully designed family block and 25% discount market rent units.
Essential Living has developed a high-quality product that is unique to Archway, and the scheme’s immediate proximity to an underground station was a significant opportunity. Essential Living has undoubtedly produced high-quality housing in an area undergoing significant council- and TfL-led public realm improvements, as well as bringing a vacant building back into use, and improving its appearance. Partaking in the planning process would have produced a different result – one that included a range of rents, but also most likely a less polished finish.