The drugs don\’t work

Originally posted in Guardian Housing Network, 15 May 2015

Housing was a far bigger issue in the 2015 general election manifestos than in 2010, and generated some of the campaign’s most controversial policy proposals. This reflects a growing public sense of crisis, and the combination of rising prices and slow construction that is particularly toxic in London, where the average house cost 11 times average earnings in 2014 (compared to seven times nationwide).

It is no surprise then that polling by Ipsos Mori shows that 28% of Londoners see housing as a top issue facing Britain today, compared with 13% nationwide. Housing is also not such a big issue for Conservative voters, and London is an increasingly Labour city, so will it remain high on the to-do list – and how will policies affect London?

The Conservative manifesto pledged to build 200,000 discounted starter homes for first-time buyers, to establish help-to-buy Isa savings accounts and to give housing association tenants the right to buy their homes. But London’s house and land prices are so high these policies will have least impact on the housing crisis in the city where it is most acute.

Help-to-buy take up has been much lower in London to date, and the new help-to-buy Isa has a maximum savings limit of £12,000, which will make only a small dent in affordability when London first-time buyer deposits are as high as £50,000.

The extension of right to buy could cost London the most, while benefitting it least. The National Housing Federation estimates that only 15% of London housing association tenants would be able to afford to buy their property, compared with 35% in northern England. But these discounted sales will be cross-subsidised by sales of the most expensive council houses, which will raise most cash in London (though high replacement costs will reduce the amount raised).

Whether boosting demand will boost supply is much debated, but the manifesto made some proposals about supply too. Measures to encourage use of brownfield and public sector land will be important in London, though much brownfield land in London is already allocated. Building on the green belt seems to be prohibited, while new garden cities will only be built where these are “locally led” (which probably rules them out in much of south-east England).

The impact of these measures may be limited in London, and parliamentary time dominated by other issues, but the coming state of constitutional flux offers an opportunity. Thanks to fixed-term parliaments, we know which party will be in government in early 2020. But we are a lot foggier about what they will be governing: a United Kingdom standing apart from its European neighbours; a loose federation of resurgent nation states; or an uneasy and asymmetric patchwork of provinces?

If all this is on the table, then housing in London must be. If the national prescription doesn’t work in London, then the next mayor should make the case for something that does; not for special treatment, but for more powers, resources and flexibility – to build more, better and faster.

London boroughs are starting to build again, and should be less restricted in borrowing against future revenue streams (including rent). The mayor should be able to establish more housing zones and development corporations to build homes using public land.

There is also a case to be made for pooling developers’ affordable housing payments across London to support a London-wide programme for affordable housing. The next mayor may also want to encourage higher densities in outer London, or push to look again at London’s green belt, and ask where releasing land (perhaps under public sector control) might provide more housing and more enjoyable green space.

Many of these solutions are highly interventionist and some would be controversial but it is hard to build the housing needed in a city like London without putting some noses out of joint. Mayors can do that. The political complexion of the incumbent should not make a difference; whatever the capital’s voting patterns, its housing crisis cannot be allowed to strangle growth.

Candidates for mayor in 2016 will vie to demonstrate that they understand the urgency of the crisis, and are committed to action. Housing could be the big issue in the next mayoral campaign; it is in everyone’s interest for the winner to be given the powers and resources to deliver on their promises.

No direction home

Originally posted on Centre for London\’s blog 27 April 2015

Londoners worry differently. We are less concerned about immigration and the NHS than other Brits, but much more anxious about housing – in 2014, 28 per cent of Londoners cited housing as one of the most important issues facing the country, versus 13 per cent across Great Britain (Ipsos MORI Issues Index, 2014 aggregated data).

The symptoms of the housing crisis are more pronounced in London, too. The average house price is seven times the average salary across England, but 11 times the average salary in London. Prices rose by 28 per cent across England between late 2008 and late 2014, but by 53 per cent in London (60 per cent in inner London).

This divergence is hurting the rest of the country as well as London: at a recent Centre for London event, former mayoral candidate Steve Norris described high housing prices as “both a fortress and a cage” preventing mobility between London and the rest of the UK, and undermining productivity.

So it looks like good news that the main party manifestos are making commitments on housing. But the specific symptoms and scale of London’s housing crisis call for specific solutions; many of the policies being touted are likely to have least impact in the Capital, where the housing crisis is most acute. The manifestos are missing the mark.

For example, whatever its much-debated merits as policy, the Conservatives’ proposal to extend right-to-buy to housing association tenants will have least impact in London, where the National Housing Federation estimates that only 15 per cent of tenants would be able to afford to buy their property (even with a discount), as opposed to 35 per cent in Northern England. Similarly, Help-to-Buy ISAs’ maximum savings of £12,000 will only make a small dent in affordability in a city where first time buyer deposits are as high as £50,000. And high land prices may make London the least economic location for 200,000 discounted starter homes.

Labour’s plans for new garden cities could relieve pressure on London, if implemented, though a commitment to working through consensus will make it hard to find sites in South East England. A preference for local first time buyers seems parochially mismatched to London’s churning population; born-and-bred Londoners do struggle to afford somewhere to live, but so do the thousands of young people who come to London every year and fuel the Capital’s economy. Meanwhile, the Mansion Tax would affect more than 100,000 householders in London, many of whom are not particularly high earners, or ‘mansion-dwellers’ by any normal definition.

To be fair, other policies will have more of an impact: the Conservatives commitment to fund brownfield land development, as prefigured by the London Land Commission announced in the budget, could favour the capital. Labour’s commitment to rent controls will be controversial with landlords, but could make a real difference to private sector renters (who comprise 24 per cent of London households, against 15 per cent in England and Wales), and powers to intervene against land-banking speculators could ginger up housing supply (London has 216,000 homes with planning permission in the ‘pipeline’).

Party manifestos are national documents, so maybe we should not expect them to be tailored to the specifics of an asymmetric housing crisis. And they are defensive as well as aspirational, seeking to offer pledges and commitments that will appeal to the majority, without opening up a flank that the other side can attack. But if London’s growth continues to outstrip expectations, how will the city find space for the ten million people forecast to live here by 2030? This is a highly-charged debate, on which the manifestos are silent: should we pursue more housing estate redevelopment, more council-led building to supplement housebuilders’ limited capacity, higher densities in suburban locations, remodeling the Green Belt, allowing more commercial-to-residential conversion?

Each of these ideas has its advocates, but each also has bitter opponents; losers as well as winners. The discussion may be as controversial in London as it is nationwide, but it will be harder for mayoral candidates to duck an issue that is so important to Londoners. Whether government lets them make a difference is a different matter, and the omens are not promising. Amidst all the talk of city deals and devolution, the modest proposal made last year in the Inspector’s report on the London Plan, that London should begin to think more radically about where it could accommodate new housing, was firmly slapped down by planning minister Brandon Lewis: Green Belt was sacrosanct, and there would be no going back to regional planning.

Nonetheless, perhaps the candidates standing for election as London’s next Mayor in a year’s time will feel the urgency of the crisis, claim the mandate, and demand the powers and resources to do something about it. And maybe, just maybe, the next government will listen.