Are we surprised, any more, when we see developers marketing luxury developments abroad with “no social housing!” as a selling point? Are we resigned to councils unnecessarily demolishing thousands of council homes rather than refurbishing them, and then watching developers sell homes that are priced at more than eleven times local incomes to investor landlords?
The Mayor’s own researchsuggested that two thirds of newly built homes across Greater London are bought by investor landlords, and that one third of buyers are from overseas.
That is staggering, and hints at why prices have been rising so much faster than average incomes in London. By stoking up demand through overseas investment, Help to Buy and buy-to-let, the Mayor and the government are increasing demand far faster than supply.
I am all for encouraging overseas investment in London businesses, but I can’t see any benefits to ‘investing’ in our property market, which should be about providing homes.
In my report, Crumbs for Londoners, I look at why the Mayor is so keen on investor buyers, and the downsides he isn’t considering.
The problem is that his approach won’t work. He says London is growing, so we need to developers to build 320,000 homes in the eight years up to 2020, and investors can help get them built. But even if the private sector could increase supply by five to ten per cent a year – developers have claimed this is their limit, and I doubt they would want to do this anyway – the Mayor would still be 93,000 to 139,000 homes short of his own target.
On current spending plans, the social housing shortfall is even worse because we already have a huge backlog of unmet needs. The Cambridge Centre for Planning and Housing Research estimates that by 2021 London will be short of 186,333 social rented homes.
In other words, the Mayor’s free market, help-the-investors strategy will leave us with an inadequate number of homes. The homes he builds will also be completely unaffordable to most Londoners, made worse by the extra demand from investors. The South London Press did a quick property search and found that only 8 per cent of homes on sale in their patch were affordable to the average household.
These are the crumbs that are left for Londoners from the property development feast.
His strategy will lead to an ever greater inequality of wealth, and leave increasing numbers of Londoners to rent with insecure tenancies and no protections against rapidly rising rents, not to mention worsening overcrowding and homelessness.
In the process, the Mayor will have flattened thousands of genuinely affordable council homes and trampled on the residents who hope to take control of their estates and communities.
London’s housing crisis can’t be solved with empty rhetoric about private developers building homes. I’m going to keep working on solutions that could dampen demand for expensive properties, that could give local residents more priority over outside investors, that could help councils, co-ops and housing associations build enough genuinely affordable homes, and that could help ordinary people weather the crisis better in the meantime.