Anticipating demand shocks: Patient capital and the supply of housing

Abstract

‘Patient capital’ is presented by many policymakers as a panacea to address domestic (and sometimes city-level) gaps in financing urban development, particularly housing, that emerged in the post-2008 credit crunch. In this article, we analyse the complexities of patient investors’ entry into residential markets in London and their response to the first major, and unexpected, crisis of demand: the COVID-19 pandemic and immediate falls in market demand. We focus on how patient capital and the firms invested in the professionalised rental market, build to rent (BTR), have responded. We highlight three main responses: (1) advancing their lobbying efforts to secure a more supportive political environment; (2) protecting their income streams by offering new payment plans and adaptability to prevent void rates; (3) turning to a ‘reserve army’ of renters backed by the state – so-called Key Workers (KWs). We argue these demonstrate a continual and co-evolutionary dimension to policy promoting patient capital and the need for patient planning to govern patient investment in housing systems. Our findings are in ‘real-time’ and highlight the importance of structural uncertainties and the breakdown of long-term assumptions in shaping investment decisions.

Introduction to special issue on the governance of residential investment

“…Through this, we contribute to ongoing emerging debates on what it means to live with Covid-19 as a backdrop to our lives, our understandings of cities and homes (Cociña et al, 2021), and as an urban condition (see Acuto et al, 2020). This is evident, for example, in how Brill et al (2022) return to the question of ‘key workers’ in their contribution and demonstrate how the pandemic has enlivened old debates and in doing so has re-constructed the language of policy targets. In their initial contribution, struck by the missing policy on what is termed in other contexts ‘gap housing’ (see Butcher, 2020), they sought to unpack how critical workers for the (social) reproduction of the city of London had largely disappeared from policy discourses and were absent from market delivery literature.…”

“…This sets the scene for focusing on a longitudinal shift and attending to investment patterns as something in flux but with periods of significant change that reflect wider crises, a theme that emerges in the work of Brill et al (2022) in this issue on the pandemic-induced responses from particular types of finance (patient capital). For all, the question of housing remains as both something produced and something consumed ; for Brill et al (2022) the consumption of housing is a question of what the market can deliver or does deliver for particular target groups. For Stirling et al (2022), a more discursive analysis of the policy narratives on consumer subjectivities provides insight into the link between national macroeconomic organisation and investment in the United Kingdom.…”

“…This more precise understanding of investment is essential, since shaping policy agendas and building effective challenges (from communities, locals, activists and progressive politicians) requires understanding the different aims and approaches of these actors. In their contribution, Brill et al (2022) call for a more patient planning approach that attends to the timescales of patient investors – indeed London Mayor Khan has insisted that the timescales for governing patient investment in housing shift such that housing must be held as social housing for 15 years. Yet, this all builds on the history of mayors that precede him – and relies on relationships with national government.…”

“…As the role of arms-length organisations operating in spaces that straddle within, between and outside the state grow in their involvement in housing delivery globally (see for example, Penny, 2021), these cases demonstrate tensions in state capacities and strategies, especially those that emerge when confronting a long history of working in particular ways. More progressive or socially attendant ways of operating are therefore circumvented by existing structures and systems (Brill et al, 2022; Geva and Rosen, 2022), yet there remains spaces of hope and a clear sense of regulatory (political) duty.…”

“…For example, in Amsterdam and London we see how the same form of investment is shaped by the very particular and path-dependent policy agendas at a national and local level. In this, we took inspiration from the ‘What is Governed’ network from which two of the papers come (Brill et al, 2022; Taşan-Kok et al, 2021).…”