Solving London’s housing crisis – is the only way up?
Across the political spectrum there is broad agreement that London is facing a housing crisis, the like of which the capital has never seen before.
More homes are needed, both for people looking to buy and to add capacity to a rental sector that’s creaking at the seams. However, there’s significant disagreement over how we should tackle this crisis. While the Mayor of London appears to be promoting yet more ivory towers, Labour is being criticised for not going far enough on its plans to build more social housing.
Readers of The Independent on 26th February might have had to suppress a smirk when learning about Shoreditch’s hipsters fighting plans for two ‘skyscrapers’ in the heart of Tech City. To be honest, many people have limited sympathy for our bearded brethren around the silicon roundabout, who are, however unfairly, often characterised as economic, cultural and social elitists, who look down (figuratively, if not from their high towers) on the rest of us.
But the hipsters are not the only ones to raise concerns about the proliferation of tall residential buildings in the capital. South of the river, the redevelopment of the riverfront between Vauxhall and Battersea bridges will see 20,000 new homes, along with shops, services, a new extension to the Northern Line and even a relocated US Embassy over coming years. To put that figure in context, only 17,000 new homes were built last year across the whole of London, so this will be a massive influx of new properties.
However, the concern is that the large majority of these homes will simply not be affordable for the ordinary Londoner. The average house price in London is now half a million, and riverside properties such as these command an even higher premium. Many commentators are now arguing that the influx of tall residential properties here and elsewhere in the city is doing nothing to resolve the housing crisis and is in fact only exacerbating it, by pushing property values even higher and leaving many of the new homes empty, having been bought solely as investments by affluent overseas purchasers.
In contrast to the Conservative Mayor’s reliance on the private sector to address the housing shortfall, Labour has pledged to lift the borrowing cap on local authorities, to enable councils to build more genuine social housing. If successful, this may provide a long term solution, but critics including Alex Hilton of Generation Rent, the campaign group for private tenants, say Labour’s targets are far too unambitious. Speaking at a Labour event in Vauxhall in February, Hilton argued passionately that the vicious circle of escalating house prices and increasing rents would never be broken unless we increase capacity to meet need, and that Labour’s current housebuilding targets will never address this fundamental issue.
Short term, Labour is looking at improving the situation for hard-pressed private renters. As property prices in the capital continue to spiral the rental market has grown massively, with over 25% of dwellings now in private rental. The UK is almost unique in the western world for the incredibly short tenure of rental agreements, which precipitates ever-increasing rents in a market where demand continues to outstrip supply. One year contracts (with a six month break clause) are the norm, whereas in Germany private renters can benefit from security of tenure extending over decades. Labour plans to introduce three year contracts for private renters to try to address this problem, but again, Hilton is fiercely critical of the small print. The proposed three year contracts would still offer a six month break clause and private landlords would benefit from even more powers to evict tenants. That aspired for security of tenure is looking pretty shaky.
The challenge facing London is enormous, and there’s no simple answer to the problem. Neither of the main political players appears to have an immediate or meaningful solution to hand. As a Londoner who loves living and working in this extraordinary city, but who shares the concerns of many fellow citizens about the future, I can only hope that we see clarity of purpose and rapid action from whoever forms the next government.
Whether it’s tall buildings, new council housing or a mix of the two to address the housing shortfall, with meaningful reform of the rental market an absolute requirement too, I fear we will need to wait until well after 7th May to learn what will actually be done.