London’s building more houses – but government must help

COMMENT: Over the past two decades, the story of London has been one of success in creating jobs, but failure in building homes. During that time, the number of jobs has risen by 40%, and the population has grown by 25% – but the number of homes has lagged behind, up just 15%, creating severe effects that Londoners know all too well, writes James Murray, deputy mayor of London for housing and residential development

In that context, the announcement by mayor Sadiq Khan that London needs 66,000 new homes a year, of which two-thirds should be affordable, according to City Hall analysis – more than double the level we inherited – is not surprising. The announcement shows that we expect our city to continue growing, but it is also clear that to achieve such numbers we would need all levels of government to play their part to help the huge number of Londoners without a suitable home find one.

For his part over his first 18 months in office, Khan has been utilising all the powers and resources available to him to their fullest extent. He secured £3.2bn investment from government at the end of last year, and has already agreed to invest half of that sum in 50,000 new affordable homes, including those based on social rent levels.

He has brought in a new approach to boosting the rate of affordable housing through the planning system, and is determined to raise the rate from the low of just 13% of total housing seen toward the end of the previous mayor’s term. Khan’s new way forward, which offers developers faster approvals if they offer at least 35% affordable housing, has sought to balance the need for more affordable housing with clear incentives for boosting and accelerating development.

This approach has been welcomed by many councils and developers, and early signs are that it is working. Recent data from London First shows that in the first six months of this year affordable housing across all planning applications has risen to 38%. The mayor’s new London Plan, due to be published in draft form in the coming weeks, will embed this approach, thereby offering greater certainty to all involved. When combined with other measures such as his affordable housing investment, it will underpin his plan’s strategic target of 50% of all new homes being affordable.

But while the mayor is doing all he can, and while many councils are also stepping up to play as full a role as they can, we know that government must also act decisively and profoundly if we are to have any chance of doubling new supply toward the 66,000 a year mark.

We need government to act because we need a radically different approach to homebuilding – one that will reduce the market’s current reliance on high-end, expensive properties for sale. We have inherited a situation in which 80% of new homes built for the private market are affordable to just 8% of Londoners. That cannot be the basis for a stable housing market, nor will it boost supply to meet Londoners’ needs.

Turning this round will require government to play a greater role; the level of homebuilding we need will not be achieved by the market alone. It will not be reached unless government puts support behind a dramatically different way of building homes in London. Alongside backing for homebuilders’ current contribution, government must start by agreeing to far greater investment in affordable housing and infrastructure by enabling councils to take a leading role in building new homes, and by giving us in London the powers we need, such as those over land, to ramp up development.

Londoners know that no part of government will be able to tackle the housing crisis overnight – they know the current situation has been years in the making and it will take years to turn things round. But in London we can see things starting to point in a better direction – and with government playing its part, we could make the step-change in new and affordable housing that Londoners so desperately need.