Local Labour’s imagination and tenacity on housing must continue, writes Steve Bullock
It is now a given that London has a ‘housing crisis’ – no one disputes this, and perhaps as a result too few people respond with enough urgency. In fact the situation is beyond crisis – London faces a full-blown housing emergency with 50,000 families in some sort of temporary accommodation every night.
The recent prominence of Boris Johnson inevitably prompts thoughts about his record on housing while serving as mayor. He certainly recognised that there was a crisis but was never able to sustain a focus on it to make a lasting impact.
At its heart the crisis is a failure of supply – specifically, a failure to meet the needs of a growing population. Everything else stems from that – falling owner-occupation, constantly rising rents, growing homelessness.
London simply did not build enough new homes, with the result that rises in the cost of housing have outstripped rises in incomes. As London’s population started to grow rapidly the situation worsened year by year. Between 2009 and 2014 the number of jobs in London grew by 14 per cent, the number of people by 7.5 per cent and the number of homes by just four per cent. To keep pace with this rising demand London should have built at least 40,000 new homes every year, but the most achieved in a single year was 29,500 in 2007-8.
The approach to building new homes in London has been one which relies on sales of new homes by developers and adds ‘affordable’ homes through a mixture of public subsidy and requiring the developers to use some of their profit to provide additional units of different types. This business model is not capable of being expanded to deliver the numbers now required because developers have no reason to flood the market with a large increase in the numbers of units for sale, even assuming that this could be financed.
Recent years have seen a seen a dramatic change in the tenure of the housing stock. Owner-occupation has declined while the private rental sector has expanded, although much of it has been of poor quality. Too much thinking and policymaking in this area has viewed these changes as something to reverse rather than understanding that they are logical responses to the effects of that failure of supply.
It will take a decade or more to resolve the supply problem, and making policy by looking backwards risks making things worse not better. The current government is fixated on ‘starter homes’, even though these are ill-suited to London’s circumstances and likely to drive down the number of new homes available to those 50,000 families in temporary accommodation.
That is not to argue against striving to increase the opportunities for low-cost home-ownership but this needs to happen by expanding and improving options like shared ownership and developing new ones such as ‘Rent to Buy’. However, there has to be an understanding that London needs to see continued growth of a responsible, large-scale PRS which makes renting a real choice for people on a range of incomes.
London’s Labour boroughs have responded with imagination and tenacity. Many are building new council housing and developing schemes to increase the numbers of genuinely affordable new homes. In Lewisham we are just completing some units for temporary accommodation which have been built in a factory and can be relocated to other sites in the future. Elsewhere we are looking at developments that include both market and living rent units. Meanwhile, the election of Sadiq Khan and the dynamic leadership he has provided since is bringing together the boroughs, housing associations and private sector to turn this emergency around.
It is simply not possible to start delivering 50,000 units a year immediately, but by adopting a radically different approach we can begin to drive up the numbers and build year on year towards that target. One of the most persistent problems has been the volume of new housing bought by investors rather than London families who want to live in it. Yet it has only been the ability of developers to secure these pre-sales which has sustained even the inadequate numbers which have been delivered so far in the face of very high and still rising land prices and build costs.
An approach that includes that rapid growth of good quality PRS developments at both market and living rents, while local authorities and housing associations are enabled to secure significantly more units at social rents, can change the way the economics of housing in London work, attracting a different kind of investment which looks for long-term stable returns, not a quick profit.
Khan has made clear his intention to use the capacity of the Greater London authority to drive this, not least by ensuring that Transport for London uses its assets to deliver housing as well as supporting expansion of the transport system.
One thing the mayor and boroughs, along with their partners among the housing associations, home-builders and investors, need to do quickly is explain that we can make a difference to this crisis but that to do so change will be required – the city will become denser, some estates will need to be regenerated and a very different rental sector will grow which can meet the housing needs of a wide range of Londoners. Crucially we need to develop an approach which improves the housing prospects of all Londoners regardless of age or income.
London’s economic wellbeing is already threatened by its housing problems as both public and private sectors have been finding it harder and harder to recruit and retain the staff they need. Addressing the housing emergency must not be put on the back burner while we seek to sustain the city’s economic success in a post-European Union world. Instead it must become a key strand of that response for the good of London and the whole of our United Kingdom.
Steve Bullock is mayor of Lewisham
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