Where have all the houses gone ?

Where have all the houses gone ?

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Sadiq Khan, Mayor of London, has set a target for building 65,000 new homes each year with half of these to be “affordable”. In 2017, 39,650 new dwellings were built within Greater London. That’s 25,350 less than the target. Over the last ten years the average completions have been around 30,000 and never reached 40,000. Over ten years that’s a quarter of a million too few homes for London. In 1973, the year that Britain joined the European Union, the average London house price was £13,000. It is now £474,000; that’s 36 times more. The downward trend in interest rates over that period has made mortgages more affordable which in turn has encouraged prices to rise. Yes, general inflation is part of the reason for increased purchase prices. The other big reason is the shortage of homes to buy or rent. In recent years, half of all central London’s new properties and one third of Greater London’s new stock has been bought by overseas investors. Some sit empty, some are rented. Tax changes have restricted investment from abroad in spite of the fall in the value of the £ following the Brexit referendum vote.

Developers and funders are now reluctant to commit to taking projects forward when sales are slow and prices are falling back. There are desperate shortages of skilled labour as so many building tradesmen are returning to Europe. Huge quantities of construction materials for UK homes are manufactured in Europe. The uncertainty over ‘hard’ or ‘no deal’ Brexit adds further to risk of tariffs and delayed deliveries. All of these factors, added to the risk, delay and unpredictability of the planning process, exacerbate the lack of housing supply necessary to avert the worsening crisis.

One piece of good news is that planning permission has at last been granted for “Beam Park” for 2,900 new homes, of which 50% are to be affordable. The site, a redundant Ford factory, crosses the border between Barking & Dagenham and Havering Councils. When Havering was minded to refuse consent in 2017 and neither council had met their annual development plan housing targets, the Deputy Mayor of London exerted his powers to call in the application and act as Local Planning Authority. Consent was eventually granted under these powers on February 7th this year. The Masterplan plan has been prepared by excellent, award winning architects, Patel Taylor. It includes a new train station, 2 primary schools for 1,260 pupils, a nursery, medical centre, retail, play and community spaces, as well as a new 3.5ha public park. Overall, there will be 44% green open space and there will be a central energy centre. The disappointing reality is that the project will take 12 years over 8 phases to complete. That’s only an average of about 300 dwellings per annum. 65,200 more are needed to reach the Mayor’s target!!

At the other end of the scale, there are problems with smaller schemes delivering any affordable content in accordance with planning policies. If a small scheme can only provide 10 or even 20 affordable dwellings, it is unlikely that a Housing Association will be able to economically manage that few homes. Hence, the legislation providing for a payment to the local authority for
offsite provision. Sadly, some L.A.’s fail to understand this simple reality and are preventing such schemes from proceeding. In such instances, perhaps the Mayor of London should step in,
take on the role of L.P.A., collect the offsite payment and build a fund to support housing associations to develop manageable scale, affordable housing schemes.

Another solution is being provided by Pocket Living who are delivering ‘compact’ homes for key workers at c20%+ below market values. These are for first time buyers earning less than £90k/a and who do not qualify for social housing. Appropriately, for key worker provision, purchasers have to be living or working in the borough where the scheme is located. Pocket Living have evolved clever 38m2 one bed flats that are meeting the “generation rent gap”. Their developments are car free, have generous cycle storage and shared car club space. Their purchasers have an average income of £42k/a which would preclude them from most properties in London without the bank of Ma & Pa. The GLA have given a repayable grant loan of £26.4M to Pocket Living to continue their roll out. 700 more of their compact one and two bed homes are on the way.

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