The Mayor should consider housing policies other than supply, including rent controls and restrictions on overseas investors, a report from Darren Johnson suggests. The report provides evidence that housing supply alone is unlikely to reverse the rising cost of housing in London, and that it will do little to help people in the next few years. Therefore the Mayor should consider other more radical changes to housing policy.
Key findings for London in the report include:
- Houses prices would need to drop at least 40% and as much as 65% for housing to become affordable for the average household overnight
- Alternatively, if house prices were to stay flat it would take between 14 and 30 years for incomes to catch up so that house prices were affordable
- We should have built more than half a million homes in London since the GLA was set-up in 2000 in order to keep up with a growing population and rising demand. In fact we built half as many
- The Mayor would need to find more land or build more dense suburbs to achieve that higher level of supply
- Higher levels of supply could be incompatible with tackling climate change
- The number of genuinely affordable social homes has reduced in the last decade, as Right to Buy sales have outnumbered the new homes being built
- The affordable housing budget has been cut by 66%, leading to higher rents being charged on the already-insufficient number of affordable homes being built with funding from the Mayor
- Building enough council housing for every private tenant on housing benefit could save £2.7bn a year in housing benefit bills
Darren Johnson commented,
“We obviously need to build more homes to meet the needs of a growing population. But the Mayor cannot continue to pin all his hopes on private developers building more homes to meet the demands of Londoners, buy-to-let landlords, second home owners and overseas investors. The consequences of this failed approach will be many more years of rising rents, more people priced out of home ownership and a dwindling stock of genuinely affordable housing.
“The Mayor could pick from a rich list of solutions developed by academics, journalists and think tanks, putting them into his housing strategy and pushing the Government to adopt them. He should also drop his simplistic opposition to rent controls and see what we could learn from other countries in Europe such as Ireland, France and Germany.”
Darren Johnson is available for comment.
The report will be available to download on the GLA web site: http://www.london.gov.uk/profile/darren-johnson/reports