London’s population is increasing rapidly and forecasts say this growth is set to continue over the next decade and more. However, the last time the capital had enough new houses to match this rate of population growth was the 1930s. Homes are becoming less affordable; needs and aspirations are going unfulfilled. London has a housing problem of serious dimensions.
This week, Boris Johnson gave us an indication of what he is proposing to do about the situation, with the publication of another draft housing strategy for consultation.
The strategy starts with a broadly sensible diagnosis of the nature, complexity, and consequences of the housing problem. The scale of the problem is already alarming, and it is only going to get worse.
The document is equally interesting when it moves on to proposed solutions.
The strategy identifies many of the policies that you’ll find in the coalition’s national housing policy statements. For example, there are aspirations for longer term institutional investment in rental housing, or moves to more rapidly bring public land forward for development.
There are proposals to help “unlock” stalled development sites – which usually means renegotiating the infrastructure provision and affordable housing obligations placed on developers. Schemes can be made more viable by reducing the number of non-market homes included or reducing the requirement to provide community facilities.
There is an endorsement of the government’s “affordable” rent regime and the policy of “pay to stay”, where better off social housing tenants are required to pay higher rents. We have the usual pious statements about ensuring adequacy of standards at the bottom end of the private rented sector on the basis, largely, of exhortation to landlords to be better.
Relaxing constraints
The strategy also includes measures that find favour in housing policy circles, if not with the government. Most notably, the mayor calls for a move to relax constraints on local government borrowing to allow authorities to develop more new housing. This sits alongside a reiteration of his call for local politicians to be given greater tax raising powers.
The mayor is also closer to the housing policy community than to the government in his support for subsidising new bricks and mortar rather than relying on housing benefit. He still wants to create new garden suburbs even though, at the national level, the government appears to have gone rather cold on this idea.
Indeed, on these points the strategy could just as easily have been written by a political opponent of the government as by a Conservative mayor.
The strategy has some sensible things to say about housing standards and lifetime homes. It takes a slightly more nuanced position on the role of affordable rents, intermediate renting or shared ownership in the housing market than has been evident elsewhere. Some initiatives, such as a London Housing Bank to support large-scale developments or the bid to increase competition in construction by supporting small and medium enterprises, are positive and potentially innovative.
Blindspots
But there are some notable, characteristic silences. At times the strategy makes sensible observations about how parts of the housing market interact. But it has a bit of a blindspot over whether activity at the top – overseas investors pushing up the prices of prime London property – has negative spillovers for the rest of the housing market.
The strategy endorses the standard-issue coalition statements about needing to rethink allocation priorities for affordable rented housing, to make more space for hard working families. But, as with all such coalition statements, it says nothing about where those who are displaced are supposed to live.
This displacement is likely to continue the trend toward greater segregation between rich and poor. The strategy encourages this further through asking for better asset management by social landlords. In practice, this means selling off high value assets: social housing in desirable locations. We’ll see more exclusive rich enclaves.
Over the past few years we have seen the development of arrangements between London councils and local authorities in other regions. The aim is to ease housing pressure by relocating households away from the capital. Although such long distance moves can be problematic for a range of reasons, it appears likely that these arrangements will continue, by necessity.
Equally, the housing supply aspirations laid out in the strategy may be ambitious relative to current performance, but they are the minimum needed to address population growth. So we can expect London to continue to experience substantial affordability problems and for some of the demand to be diverted to surrounding areas, as people search for lower cost housing. More working households on modest income households will face longer commutes.
The strategy contains some interesting, and potentially contentious, statements about, for example, how housing association assets should be used. Many housing associations, as is their right as independent bodies, have decided not to develop new housing under the terms of the government’s affordable rent scheme. However, this means they are sitting on unencumbered equity. The government would like to get its hands on this and mortgage to the max. The mayor has indicated that he wants to “explore how these associations can be supported to unlock capacity in the sector”. This could be turn out to be a battle ground.
As with all such documents, it is in the next phase - the prioritisation, the budget allocation and the delivery - that we will get a better sense of where dealing with the housing problem sits on the policy agenda, and what sort of city the mayor is seeking to create.
Indeed, critics might argue that since 2008 the mayor has been rather stronger on draft housing strategies than he has been on implementation.
But perhaps the biggest question, understandably, goes unaddressed in the mayor’s strategy. Is the continued concentration of population and economic activity in and around London healthy for the long term growth, and the political and social integration, of the country as a whole?
The strategy sees the growth of London as good for the rest of the country. Other regions are there to provide inputs to feed the beast and keep it growing. I’m not sure that scenario will be viewed as quite so desirable from beyond the M25.