Kate Hilpern
More affordable homes are crucial to endd the capital’s crisis, but we’ve opened the door to new ways of thinking, says
When it comes to housing, London is now the second most overpriced and least affordable city in the world, according to Swiss bank UBS. Skyrocketing house prices, now 16.6 times the typical income, mean that first-time buyers can’t get on the ladder and families trying to step up are being priced out.
To put things into perspective, house prices in London have risen by 25 per cent in just two years. “Anyone earning less than about £80k is going to find it very hard to buy, even with one of the Help to Buy schemes or a discounted starter home,” says Julia Park, head of housing research at architecture and design firm Levitt Bernstein.
And with the average private rental cost (£1,727) now eating up 61 per cent of the typical monthly income, even affording London rents — let alone saving for a deposit on top — can feel daunting, if not impossible.
“The London housing crisis is affecting the lives of thousands, right across the capital,” says Mairead Carroll, spokeswoman for the National Housing Federation (NHF). This includes lowincome workers who keep the city ticking, first-time buyers wanting a foot on the ladder, couples looking to start a family and those desperate to escape the money trap of renting privately.” She says an average household needs an income of almost £130,000 just to afford a mortgage on a typical home.
But while building more homes may seem the most obvious quick-fix solution to the city’s need for 63,000 new homes each year, many say it isn’t.
“The housing crisis is not just a crisis because there is a shortage in housing, it’s a crisis because there is a real problem with our access to affordable housing,” explains Simon Finneran, MD of Ad Hoc Property Management.
“The issue here is more about price than supply. We all know the score: developers make more money selling high-value properties to foreign investors than by championing cheaper housing. But the truth is that we need affordable options, and fast.”
No wonder London mayor Sadiq Khan’s plans to work with the private sector towards not just building more houses, but building affordable ones, have been so widely applauded.
“The mayor’s proposals for a recordbreaking investment of £3.15 billion to support 90,000 new affordable homes consisting of low-cost rent, shared ownership and London Living Rent will hopefully alleviate those wanting to step onto the property ladder,” adds Finneran. “And his target for 35 per cent of all new homes in London to be ‘genuinely affordable’ by placing housing associations in the driving seat is welcomed.
“But I believe that the city would also benefit from a fully integrated strategy that looks at a number of different options, such as making use of vacant properties and micro-housing. London needs ‘blue-sky thinking’.”
He cites the former government’s July 2014 Technical Consultation of Planning, which proposed a scheme permitting development rights to allow
The mayor’s proposal for 90,000 affordable homes will hopefully alleviate those wanting to step onto the property ladder Simon Finneran
commercial buildings to be used for residential purposes for up to two years without the need for planning, as a great example. “Temporary change of use schemes such as these should be promoted under certain conditions that cut red tape and could really see less boarded up and derelict buildings in the capital,” he says.
There are so many potential solutions — both big and small — that need serious consideration, agrees Park.
“Among others are building more retirement housing, halving stamp duty for older people who downsize, and doubling it for those buying second homes,” she says. “Offering reduced rents in return for community service is a further idea — for example, the Dutch model of intergenerational living whereby young people enjoy low rents in return for helping their older neighbours in simple, practical ways such as by shopping, cleaning, cooking, teaching computer skills, etc.”
According to the NHF, 79 per cent of Londoners would support new housing in the capital if it was affordable to local people on average incomes.
“This is the highest level of support in the country,” says Carroll, who believes that relationships with smaller, developing housing associations are particularly crucial to achieving this “as they are eager to build more homes in pockets of London disregarded by private developers. The capital must also adopt a different approach to land. A strategic review on how it should be evaluated, managed and sold would enable land to be built upon sooner and for public good.”
For Ian Fletcher, director of real estate policy at the British Property Federation, the idea of putting our eggs all in one basket to solve the housing crisis is simply not an option.
“We need a housing sector firing on all cylinders, delivering build-to-scale, build-to -rent, shared ownership, affordable housing, among others,” he s ays . “And to be delivering on all fronts: brownfield, greenfield, the centre, the suburbs, at greater density where appropriate, and regenerate our estates where communities can be given sufficient guarantees. We must not lose sight of the fact, however, that a sustainable neighbourhood must also have places to do business and therefore we also need to plan for offices and warehouses, schools and health centres, leisure space and all the things that make a community.”
But while there is wide recognition that increased urgency is needed to turn things around, it will be a marathon not a sprint, believes Fletcher: “Two decades of undersupply will take the best of two decades to resolve.”