Which new mayor will solve London's housing crisis?
With just a day to go until Londoners vote on 5 May to decide who will be their next mayor, will frontrunners Zac Goldsmith or Sadiq Khan do any better than Ken Livingstone or Boris Johnson when it comes to providing affordable housing?
When Ken Livingstone became mayor in May 2000, the ratio of house prices to earnings across London was 5.6. When he left office in 2008, house prices had risen to 8.3 times average earnings, according to analysis of data from the Department for Communities and Local Government by property crowdfunding platform Property Partner.
It found that since Mr Johnson was elected mayor in 2008, house prices have continued to rise. Prices across the capital are now 11 times the average annual pay with 28 of the 33 London boroughs now at least 10 times average salaries.
What are their policies?
Conservative candidate Zac Goldsmith has pledged to:
- get 50,000 new homes built a year by 2020, while ensuring that development is in keeping with the local area;
- give people who have lived and worked in London for more than three years the first chance to buy new homes built in London;
- release publicly owned brownfield land for house building;
- ensure a significant proportion of all new homes are only for rent, not for sale.
Meanwhile, Labour candidate Sadiq Khan has promised to:
- set up a New Homes team at City Hall dedicated to fast-tracking the building of genuinely affordable homes to rent and buy;
- set a target for 50% of all new homes in London to be affordable, and use mayoral powers and land to stop 'buy-to-leave' and to give 'first dibs' to first-time buyers and local tenants;
- support housing associations in their plans to ensure a minimum of 80,000 new homes a year;
- bring forward more land owned by public bodies, such as Transport for London, for development;
- create a new form of affordable housing, with rent based on a third of average local income, not market rates.
Dan Gandesh of Property Partner says: “Whoever wins on Thursday needs an innovative approach to help resolve the supply crisis. Neither of the two frontrunners has even been able to define ‘affordable’. What is crystal clear is that most Londoners are being priced out of the housing market as properties now stand at 11 times average earnings.
“The solution to the housing crisis in the capital must be radical. There’s no time to waste. Potentially unpopular solutions, like building on the green belt, should be seriously considered. Housebuilding needs to double to meet demand.
“But perhaps the British obsession with mass home ownership needs to change too. With government support for build-to-rent initiatives, long-term renting could eventually fill the gap, with larger institutional landlords taking over the sector, providing affordable rents and professionally managed properties rather than multiple, small private ones.”
Online estate agent eMoov.co.uk has looked at historic data on housing from the Department of Communities and Local Government to weigh up Labour and Conservative’s chances of improving London’s housing. It found that housing stock increased by 186,000 dwellings under Mr Livingstone, compared to 152,000 under Mr Johnson – so would-be homeowners fared better under Labour.
However, Londoners who were existing homeowners enjoyed bigger house price hikes under the Conservatives. During Mr Livingstone's time as mayor, between 2001 and 2008, house prices in London went up by 89%, compared to 113% nationally. In contrast, between 2008 and 2014 with Boris Johnson as mayor, house prices in London went up by 41%, compared to just 30% nationally.
So under Labour, house prices rose at a quicker rate but by less than the national average. Meanwhile, under the Conservatives, there was a smaller house price hike in London, but prices outperformed the rest of the UK.
“It’s always hard to pick a side when we, the UK public, are subjected to the onslaught of smoke and mirrors deployed in the run-up to an election. We’ve seen the monumental failure of the Help to Buy scheme over recent years, which was supposed to be the answer to our first-time buyer woes, so it’s always hard to decide which candidate to trust,” says Russell Quirk, chief executive of eMoov.co.uk.
“Yes, Boris and the Conservatives have generally seen London property values increase at a higher rate than the UK, but one might argue that having inherited a pretty raw deal in 2008 after the market crashed, the only way for things to go were up.
“However, the capital is in the tight clutches of a housing deficit at present. I’ve highlighted time and time again that the lack of London supply is fuelling a dangerously artificial bubble in the capital. It’s only a matter of time before it pops again.”
Fewer new homes built
In the build-up to the election, fewer new homes have been built. Four out of 10 new homes were rejected across London in the first quarter of 2016, with just 4,320 new homes approved – down 64% annually, according to Stirling Ackroyd’s latest New Homes Monitor.
If this figure was spread over a year, it would mean just 17,290 new homes being granted approval – much below the 50,000 houses a year needed to house London’s growing population.
Randeesh Sandhu, chief executive of Urban Exposure, the residential development finance provider, believes that building on brownfield land is the answer to London’s housing crisis.
“Although we have heard much in recent years from government about supporting brownfield development, the outcomes have been hugely limited. What London needs is a mayor truly committed to unlocking these sites that could add an estimated 365,731 new homes in the capital,” he says.
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