New developments in London require a relentless focus on affordability - nothing less will do

Aug 08, 2016 3:41 PM

For the rest of the summer, London politics is formally in recess. Yet, the city keeps on moving and the Mayor has been publicly engaged with the housing elements of a number of high-profile developments.

Recently Sadiq Khan has intervened to increase the affordability quota at the first housing development at Old Oak; conversely, he also nodded through the controversial Plough Lane development despite its plans including only 10% of affordable housing.

This is important for private renters if the London Living Rent is to become a substantial part of the affordable housing mix coming out of City Hall in the next four years.

Yet with land prices at the level that they are in London, it’s not unreasonable to ask – how can we see a step-change in building tens of thousands more genuinely affordable homes in the capital?

We know that the cost of development land in central London rose 50% in the five years to 2016, although it appears to have plateaued in recent months. At the same time, developers have been looking to outer London boroughs for areas where they can acquire land more easily.

In fact, there are number of fairly simple ways to push up the levels of affordable housing on new developments across London.

The first is to say that developers take the hit. With his mooted changes to planning regulations, under which housing developments have to include 35% affordable homes (including for private renters through the London Living Rent), the new Mayor appears to be starting on that course.

Although he is falling short of his commitment to making 50% of all new stock affordable (now downgraded to an aspiration), it certainly pushes developers far further than in recent times, where the proportion of new starts that were affordable in 2015/2016 amounted to only 14%.

Critics will say that many sites just aren’t economically viable if high rates of affordable housing are included, due to the risk and cost of acquiring land. Notwithstanding the disingenuous nature of many of these claims, in an industry known for wilfully forcing down levels of affordability, there are ways to bypass this land problem.

Doing so requires that the Mayor goes in hard on public assets, insisting that any site owned by the state should be aiming for closer to 100% affordable levels. Much has been made of the landholdings of Transport for London as a means for increasing the city’s housing supply, but a coordinated approach is vital in disposing of these sites.

There are also competing pressures. TfL will look to support its own budgets through maximising returns from these sales. However, this approach must be resisted.

These sites should provide the basis for large numbers of social housing and London Living Rent units. Their proximity to transport outlets can only help to retain London’s mixed communities and help middle and low-income workers navigate the city.

In addition to TfL land, the Mayor has to be win the argument with other government departments on affordable housing. If we are to see a reconfiguration of London’s prisons and hospitals, then the Ministry of Justice and the NHS need to be working out sales prices that allow for large numbers of homes that ordinary people can rent and buy. Community Land Trusts and self-build should therefore be part of the mix.

Finally, and inevitably, if we are really to achieve greater affordability in the London context, the State has to be spending more itself on housing. Borrowing has never been cheaper, so the most basic economic argument to do so is sound.

Furthermore, local authorities are finding new ways to develop their own stock and should be given greater flexibility to build to complement the Mayor and central government.

Ultimately, new developments should be about politicians practising what they preach. If they really believe that Londoners need more affordable housing of all tenures, policy should support that, not build homes that only a tiny proportion of the population can afford.

For far too long, there has been no attempt to address affordability in London’s private rented sector. The London Living Rent will be a small but positive step, but only if every new development can maximise its affordability levels, and public land is used to bolster that, rather than to plug the holes opened up by austerity.