Cutting the cost of housing
Over the last two years house prices in London have continued to rise, increasing the difficulty families face in getting onto the property ladder. With rents rising fast and incomes being squeezed there has, not surprisingly, been growing pressure for the government to tackle the crisis in London’s housing market.
Indeed, many business leaders are openly talking about the difficulties their staff face in finding affordable homes, while the recession and cuts in the housing budget have hit the construction industry very hard.
Ed Balls, Hilary Benn and Jack Dromey have been championing Labour’s plan to use the £3-£4bn from the sale of the mobile phone spectrum to build 100,000 more affordable homes – helping to give families the chance to get on the property ladder, creating jobs and boosting the economy just when we need it most.
Even if the chancellor were to listen, further reforms to the housing market are needed to ensure that those who live and work locally can have the chance to buy homes at an affordable price in their area.
When Margaret Thatcher introduced the right to buy she also allowed local councils in Britain’s national parks to restrict the onward sales of former social housing to people who have lived or worked in area for three years or more. This restriction helps to ensure local people are not entirely priced out of a housing market dominated by second home owners.
A bill I introduced today in the House of Commons would extend this principle to all urban areas, helping to give particularly those in London a better chance to buy.
Estate agents estimate that in some of the national parks this ‘local occupancy clause’ reduces the price by between five and 30 per cent but more typically brings the price down by 10-20 per cent.
In London where average earnings are a fraction of average house prices such a rule could help more people get onto the housing ladder.
It could make a particular difference in the suburbs of London. In Harrow, average earnings are around £30,000, but average house prices are more than 10 times this at £309,000. In other London suburbs average house prices are between 7-9 times average earnings, so a 10-20 per cent reduction in price would help a significant number of families to afford their most important purchase.
The bill also encourages councils to promote co-op housing to again help those who can’t afford to buy. Co-op housing has for too long been a forgotten option for housing authorities and this measure could help to change the incentives so that, as in Sweden, Norway and Germany, cooperative housing options are given proper consideration.
Last, the bill seeks to address the blight of land banking, where developers buy the land for housing and then sit on it while they wait for values to rise. Such land can often be a significant blight in local communities and further reduces the supply of affordable housing.
With 12 marginal seats on Labour’s target list in London and a number of others in the M25 commuter belt area housing costs are likely to be significant issue for many families wanting to move up the property ladder but worried about mortgage costs.
Wider reforms to the private renting sector where quality of housing and rent hikes are real concerns in suburban areas like Harrow are already being explored and debated within the party.
The measures in my bill could help to make it just a little easier for the dream of home ownership to be brought closer for many of our most important potential supporters.
Gareth Thomas is MP Harrow West. He tweets @GarethThomasMP
Ed Balls, Gareth Thomas, Hilary Benn, housing, Jack Dromey, London