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.