Progress and Priorities for Housing
in London
Christine M E Whitehead
LSE
Next Steps for Housing Policy
Policy Forum for London, October 15th 2014
Glaziers Hall, London
Progress
The Negatives: the Positives
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Completions still falling
Densities and overcrowding increasing
Homelessness rising – 80% higher than in 2010
House prices and new let rents rising
BUT
Planning permissions and now starts rising quite rapidly
Increasing emphasis on unlocking large sites with assistance from
GLA/HCA and DCLG – Housing Zones
Increasing interest from Housing Associations and institutional
funding in PRS
Attempts to improve rental offer
Large number of government incentives
Hope over Experience or a New World?
What are the big issues?
• Shorter term problem arising from the financial crisis and
the subsequent near closure of the mortgage and
development funding markets
• Longer term problem about the slow and inadequate
response of new supply to changing demand
• The concentration of demand in London
• House price volatility and macro economic instability
• Worsening access to housing of all types
• Structural changes in tenure
• Reductions in government support for both supply and
demand - which are unlikely to be reversed whatever the
result of the election
• Current plans need a reality check
How big is London’s housing
problem?
• Updated projections
suggests 53,000 homes a
year required
• This still implies falling
headship rates for 25-34s.
• ‘No age group worse off’:
63,000 homes a year.
• Alan Holmans: 23,000
affordable homes a year
• 15 boroughs housing a third
more households in over 20
years?
• London’s housing shortfall
could be around 30,000
homes a year
What has been happening?
• Many fewer
younger households
• Many fewer single
person households
• More ‘others’
• More couples – with
and without
children.
What might
happen 2011 to
2021?
2011-21 - from DCLG 2011 Homes needed or released
New 15-24
124000
15-24 to 25-34
535000
25-34 to 35-44
285000
35-44 to 45-54
-6000
45-54 to 55-65
-52000
55-64 to 65-74
-91000
65-74 to 75-84
-56000
75-84+&over to 85&over
-199000
• Cohort requirements from
DCLG’s 2011-based
projection (based on
53,000 pa)
• 149,000 homes released
by households aged 35-74,
many from moves out of
London – but will there be
somewhere for them to
go?
• Biggest impact of
undersupply likely to be on
groups with biggest net
requirement
Priorities
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Is it just new build, new build and new build?
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But building more will not have much immediate effect on prices;
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The recession has reduced household formation – so any economic improvement
is likely to offset demographic changes putting further pressure on the market;
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The demand for housing rises not just with demographics but as much because of
income growth – so economic success means higher demand;
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So there is an inherent tension between success in the London economy and
success in providing housing for Londoners;
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The easiest and worst way of reducing demand and house prices in current
conditions is to have a recession. This is NOT what anyone wants;
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So have to accept indicators will get worse BUT not a reason not to try.
Concerns about what and where we going
to build?
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Plan assumes (has to assume?):
- building within the GLA boundary
- building high and high/super density
- building for the private rented sector
- continuing to build significant proportions of social and affordable housing;
But very different development model from before the crisis and many reasons
(including experience) to expect the process to be much slower than predicted;
And scale and location issues:
- Opportunity and especially housing zones
- Garden cities and/or cities within cities?
- Change of use from commercial
Greenbelt/greenfield?
All must be tried, but all have major issues (including the potential for building the
slums of the future)
Still massive political objections to development, especially in outer suburbs where
need to raise densities
A More Fundamental Priority: Housing, Welfare and
Affordability
• Who can afford to live in London?
• Camden evidence that only 14% of those in the private rented
sector (33% of the housing stock) are in receipt of Housing
Benefit – the poor have already left?
• Majority of new claimants working and often on incomes well
above the median - implying both very high marginal tax
rates for tenants and no direct incentive to keep rents down;
• Universal Credit may even worsen the situation;
• Alternatives to the welfare bill – owner-occupation; a better
form of intermediate housing; grants for social housing?
Conclusions
• If London is to remain a world city the housing problems will not go
away – indeed will probably worsen;
• Those who are prepared to pay more and live in worse conditions
will outbid those who can make other choices;
• Need to do all that is possible to build – but new initiatives take
longer to get going;
• Can more be done in more traditional ways – especially in the outer
suburbs;
• The current model of revenue subsidies cannot be sustained
• Need intermediate tenures – including shared equity - to play a
larger role;
• Need to improve outward mobility;
• Need to tax established households more effectively;
• Need commitment and stability in both policy and the macroeconomy!