London Calling (Is Anyone Listening?)

by Ken Gibb

Rising waiting lists and estimates of housing need tell us clearly and consistently that more non-market housing supply is urgently needed. Adding to our number of homes is, however, often confounded by a trinity of problems: a much reduced subsidy-funded programme and accompanying lower subsidy rates; rents at the wrong level (too high for tenants and too low for investors) and, of course, housing benefit reform.

Nowhere is the problem more pronounced than in London. In the year to end March 2012, Greater London built more than 16,000 non-market units. Despite this achievement, private rents and house prices remain much higher than anywhere else in the country. Waiting lists are high and rising (more than 366,000 in 2011), unmet need worsens (homelessness acceptances grew by 27% in 2011-12 alone) and the 2011 Census suggests population is rising strongly. Indeed, the overall picture is an imbalance of more households than homes.[1] Despite major efforts across the sector, the problem is likely to get worse.

Yesterday morning I spoke at a housing sector seminar run by Future of London and the Joseph Rowntree Foundation. Ostensibly, my focus was on reviewing international and cross-UK innovative financing models of affordable supply. However, I came away with a number of broader messages about the plight of housing in London.

First, there is controversy about the desirable composition of new supply between market, intermediate and social housing. The growing net deficit may suggest a case for prioritising the injection of more market housing across London and more intensive use of the large social housing stock (24%). This would focus on more need-based allocation of vacancies for social housing and wider use of income ceilings for affordable housing. This can be done and would help on several fronts but it is not a particularly attractive prospectus for the poorest in need in the capital.

Second, I think there is an important distinction to be made here between stocks and flows. The stock of London’s social housing is large but the key question is what dent will relets make in waiting lists? Will this be as effective as new social supply?  Relying to a greater extent on vacancies in a system characterized by chronic excess demand sounds like a slow way to eat into the problem, even if it does switch to a more priority-based allocation.

Third, fingers were pointed at features of the planning system constraining housing supply.  In part, this was about the perceived failure of S106 agreements to deliver more non-market housing. More basically, it represents a private sector sense that the planning function has not delivered enough new sites for development. There was also a view that supply is concentrated in certain parts of London in a way inconsistent with the actual geography of need (which is more dispersed).

Fourth, many commented on (or lamented) the long-term shift from supply-side to demand-side subsidy for non-market housing and highlighted the latter’s exposure to risk in the form of austerity or ideology-driven welfare benefit cuts.  One delegate made an interesting contribution comparing the reliance on demand-side subsidy to PFI – low public capital outlay initially but considerable risk in the form of long term on-going revenue costs. Will the current housing model turn out to be as bad a bet?

Many of these points share a common strand: inconsistency in policy and action locally. This is true of the supply mix, the often ‘incomprehensible’ rent variations facing tenants making choices (as one person said), allocation systems, and S106 practice  – to name four. Can London’s leaders build a more consistent system from the bottom-up but still reflect local variety of preferences and encourage local experimentation and innovation?

Politicians and practitioners are understandably focused on delivering their current affordable supply targets for London. But we should not let it obscure the long-term requirement to tackle the housing pressures documented earlier.

Nor is this just a matter for London. The capital’s housing sector performs an integral role in the world city’s economy and it matters hugely to the rest of the country, and not just adjacent regions. We can’t afford to either let housing dysfunction continue in London or to imagine that all points North are somehow unconnected and independent – they are not.

1. All figures from: Ben Harrison, Joanna Wilson and Jennifer Johnson, Future of London (March 2013) Changes to Affordable Housing in London and Implications for Delivery. Joseph Rowntree Foundation: York (www.jrf.org.uk)

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