The London mayoral election
Tony Ward is chief executive of Clayton Euro Risk
As the candidates for London mayor take turns to outline their proposals to tackle the capital’s severe housing crisis, the disappointing reality is that the number of new homes is down.
According to the latest data from the National House Building Council (NHBC), the number of homes registered to be built fell by 15% in London and 9% across the country as whole. 36,566 new homes were registered in the first quarter, down from 40,144 in the same period last year. England’s North West was the only UK region to record a rise in registrations.
And so it continues; supply lags, lags and lags behind rising demand.
Once again, it’s the capital which seems to be bearing the brunt of this malaise. Over the past decade, London’s economy grew twice as fast as Britain’s and its population 50% faster. During the last full economic cycle, from 1993–2008, the cost of a single hectare of residential land in London increased by over 300% in real terms to more than £8m. Commercial property prices weren’t immune to these eye-watering increases either. Yet still the capital remains where the work is and where people struggle to afford to live. According to think-tank Centre for London, the disposable income of private renters in inner London dropped by 28% during 2001–2011.
Unsurprisingly, not enough space is given to new development. Over one-fifth of land is green belt open space encasing the city, which is largely off limits to developers. However Paul Cheshire from the London School of Economics suggests that Greater London has enough green belt land to build 1.6 million houses at average densities. And while there would be strong opposition to any policy change, the Campaign to Protect Rural England says that councils are changing green belt boundaries at their fastest rate for two decades. Research based on councils’ draft and adopted local plans reveals more than 117,000 homes are planned for the metropolitan green belt around London, including 42,000 in Hertfordshire, 20,000 in Surrey, 13,000 in Bedfordshire and 9,000 in Essex. If this comes to fruition it may ease the problem.
Other potential initiatives includes allowing Londoners to add extra storeys to their home if an adjoining building is taller, and easing restrictions on converting offices into dwellings. But some other new policies on the drawing board will discourage homebuilding. For example, from 2020 councils will gain full control of business rates and receipts, which will inevitably lead them to favour commercial development.
It’s a minefield. An Ipsos MORI survey conducted on behalf of London councils late last year found that the top concern among Londoners, who will vote for their new mayor on 5 May, is the capital’s housing crisis. The London electorate, more than anything else, wants a coherent housing policy that will address the shortcomings and inequities in their booming city’s property market. Alas, neither candidate seems bold enough to propose anything as radical as will be needed. The plans they have announced amount to tinkering around at the edges with more than a hint of window-dressing. For a solution to have any quantifiable impact, it will by necessity upset one or two vested interest groups – and no one wants to do that on the eve of an election.
Election or no election, now is the time for a clearly-defined course of action that will sort out London’s property market. The capital’s mayoral election will be old headlines in just a week; its housing crisis will be generating column inches for years to come.