After last week’s fanfare and triumph – now comes the hard work for Sadiq Khan. London is in the throes of a housing crisis despite increased activity under Boris Johnson. His task – outlined below – is to increase activity again threefold. Is it doable? Graham Shone has gone leaping into the vaults of London Residential Research to find out
Something interesting about Khan’s manifesto is that it does not give precise detail on how many homes he targets building each year; it simply states that London needs ‘more than 50,000’ new homes delivered annually.
Estimates across the industry seem to keep ballooning, from 59,000 in summer last year, to 64,000 just this week – so realistically we are looking at needing to provide close to (or more than) 300,000 new homes for London by the end of 2020. Our figures show that on-site delivery in the last five years has totalled 112,988 units [2011-2015 inclusive. Social units completed in 2015 still estimated pending confirmation in mid-late May], so the task facing Sadiq Khan is, essentially, to almost treble the activity that has gone before.
This is daunting – but not impossible.
Let’s wind back to the start of 2011. Back then, we recorded just over 170,000 units in the ‘pipeline’ – which we define as being either under construction, permitted, or at the application stage awaiting a decision. As mentioned above, nearly 113,000 units have since completed; representing 66% of the January 2011 London residential pipeline converting into delivered units by the end of 2015.
London home completions: rolling five-year totals
Key:
% = Units developed as % of overall pipeline at the start of five-year period
Years = units delivered over five-year period
Stats gleaned from developments over 10 units in outer boroughs, five units in inner boroughs.
The pipeline currently stands at a gigantic 350,000 units, having spiked massively during 2014 thanks in no small part to the introduction of permitted development rights in mid-2013, and the spike in tower proposals over the past couple of years – both of which we have extensively covered in previous market reports.
Simple maths tells us that a continuation of that 66% ratio between end-of-year pipeline and subsequent five-year delivery would result in just over 230,000 units coming through by the end of 2020 – which gets close to what many are seeing as the minimum requirement of 50,000 homes per annum.
Increasing that ratio to 86% would give us more than 300,000 units across the period to 2020 – and perhaps the greatest challenge facing Khan is to ensure that both developers and housing associations have enough incentive and resources to boost London to that level of delivery while also making good on his promises around the mix of new homes the capital requires.
The most realistic target, given the vast numbers of units in the pipeline, is to reach 300,000 units (or thereabouts) by 2020, if developers are not too hamstrung by other impositions and if there is a gradual bounce-back on the luxury resi sales front, which has seen a bit of a blip this year – such is the importance of those sales to the fuelling of increased construction activity.
There must be a clear definition of what ‘genuinely affordable’ means, and perhaps a realignment of the 50% target on this front. Perhaps this needs to be divorced, or renamed entirely to simply ‘affordable’ units, which evidently are being equated with the relatively expensive (at the top-end) starter homes as the Housing Bill starts to move through parliament towards its end game.
If not, we cannot realistically expect to build the volumes of homes required by 2020 while also insisting half of them be ‘genuinely affordable’. Land in London is too expensive presently to entertain such utopian visions and, given what the pipeline currently holds, it is incredibly difficult to imagine a ‘catch-up’ in social provision given how far even housing associations have had to move the other way in recent years.
Details around Khan’s proposals for protecting business space from conversion, as well as the composition of his ‘new and powerful’ Homes for Londoners team in City Hall, will no doubt be strongly scrutinised – and once those are outlined, we can begin to speculate with greater clarity on what shape we will be in by 2020.
If I was to speculate now, however, I would say we will end up with greater overall numbers of houses built than in the Boris years (by quite some distance, given the pipeline), and there will be a concerted City Hall effort to make as many affordable as possible with mixed success – and potentially more individual boroughs climbing towards that 50% mark as long as ‘affordable’ is properly defined.
Such an emotive issue is housing, that it is quite tough to reduce it to a simple numbers game; and those numbers can often define a mayoral term in either glowing or harsh terms. Khan needs to make sure that he gets his housing sums spot on if he is going to be deemed a success – and at the moment, they are pointing slightly towards his various aims and targets cannibalising each other.
• Click here to read all EG’s coverage of the mayoral election
• Click here to read about Sadiq Khan’s housing promises and obstacles
• To send feedback, e-mail graham.shone@estatesgazette.com or tweet @GShoneEGi or @estatesgazette
