1st October 2015
Addressing the housing crisis
The post-election period has seen a storm of housing announcements – from extending Right to Buy and rent reductions, to the proposed pay-to-stay policy and forced disposal of high-value council assets. Collectively, these changes have the potential to reshape the affordable housing sector on a scale not seen since the introduction of right to buy.
In London in particular, these changes impact on an already volatile and stretched housing market. Pressure means prices are one-third higher than their pre-crisis peak and continuing to rise, contributing to a huge drop in home ownership as it becomes increasingly unaffordable for many.
As homeownership has fallen, so private renting has soared, with the spiral of demand sending London’s high rental costs ever higher, to an average of more than £280 a week – almost double out-of-London rates.
This isn’t just a concern for the capital, London’s housing problems have far wider implications. Firstly, with London accounting for one-quarter of the national spend on housing benefits, the burden on the exchequer is increased.
Secondly, the lack of affordable options is pushing more families – and some London councils – to search further afield for somewhere to live.
Thirdly, the ever-growing housing bubble means the gap between income and housing costs continues to stretch. Whether to manage a bubble, reduce the benefits bill or ensure London can meet and manage its own housing needs, housing supply in the capital surely matters for the entire country.
At its core, London’s housing problem is one of chronic undersupply. At least 49,000 additional homes per year are estimated as needed to catch up with demand and support a growing population. Last year, just 18,700 homes were delivered.
The challenge is to establish how we double the number being built and maintain momentum, while also ensuring that enough new homes are affordable for Londoners.
The London Housing Commission, on which I sit, is exploring how we might address this. The commission’s aim is to gather evidence and report in March next year so that whoever becomes London’s new Mayor has a solid evidence base and policy ideas to address the capital’s urgent housing needs.
The Mayor will need to work with boroughs and with central government to deliver on housing promises. The commission welcomes the input of others – with and outside the housing sector – to ensure we have the best evidence and new thinking around housing delivery, affordability and quality, and that we can think big about the measures needed to fix the housing market.
By Nick Walkley, Chief Executive, Haringey Council