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Increasing London’s affordable housing targets misses the point

Paul Finch

Only a significant increase in housebuilding by the public sector will effectively tackle London’s shortage of homes, says Paul Finch

While politicians of all persuasions sound off about the need for more housing, the people who design and build it seem to be increasingly ignored, as though talking is the equivalent of construction. As we fail to meet targets, the speech-makers think they are doing their bit by increasing them, rather like Stalin and his wheat production policies in the 1930s. I keep coming across architects and housebuilders who have significant projects on hold because of new requirements in respect of the ‘affordable’ percentage newly required.

In London, Sadiq Khan may have impeccable targets and percentages, but they do not seem to be translating into starts and completions, with thousands, possibly tens of thousands, of future homes mired in the planning system, even after they have been given permission.

There appears to be no real sense of urgency except in the Treasury, where the chancellor keeps making noises about help for housing in the forthcoming budget. There is only one question we need to ask of Mr Hammond: will new policies increase supply, or merely stimulate demand via subsidies of one form or another? It is no good ‘helping’ if the product is unavailable. Nor is it enough to drone on about speeding up planning; in reality it is not planning that is the problem, but political inactivity.

Sadiq Khan seems to think the more he taxes housebuilders by increasing affordability targets, the more completions he will get

Without wishing to sound like a cracked record, I repeat my proposition that the only way to get us out of the current mess is to encourage supply by launching dirigiste initiatives by government and local authorities to supplement what the private sector and housing associations are likely to produce over, say, the next 10 years.

My favourite model for such programmes would be a Homes and Communities Agency (HCA) committed to procuring housing as a client, rather than passively engaging with the market through land deals. It would be better off operating like the housing equivalent of the Olympic Delivery Authority, and it already has the powers to do just that. For example, the HCA can grant itself planning permission on land which it already owns. It also has compulsory purchase powers (when did it last use them?) which could unlock difficult sites across the capital.

However, there is no point in exercising these powers if it then simply sells sites to housebuilders. They will bid up the price of the land rather than think about maximising the number of reasonably priced homes that might be generated. A proactive HCA could develop sites based on number of units, tenure mix and an ‘affordable’ percentage determined by itself. Contractors would be used, not housebuilders, who would go about their business in the usual way.

Currently, like his predecessors, Sadiq Khan seems to think the more he taxes housebuilders by increasing affordability targets, the more completions he will get. This is a fantasy, as the figures under both Livingstone and Johnson show. But cutting the percentage of affordable homes required would not result in sufficiency of supply, even if it sped things up in the short term.

London pretty much housed itself for a century, during which the old London County Council and its successor bodies had active construction programmes, along with the London boroughs. The pitiful lack of activity or commitment by these bodies, with a few honourable exceptions, is the real reason for a housing shortage exacerbated by external factors such as inward migration. You can’t blame it on planning and you can’t blame it on housebuilders. But that is the stock political response, because the political class is too embarrassed by (or possibly simply ignorant of) its own failure to address what is plain for all to see.


Readers' comments (3)

  • I completely agree with Paul that central government needs to become actively engaged and provide significant funding, coupled with an active role in delivery. The Mayors policies are otherwise well intentioned but likely to be ineffective.
    Sajid Javid seems to be trying. With £70bn of debt moved off the books today, prior to the budget, perhaps, finally the Chancellor is getting on board? If only the conservatives can move away from the 'home owning' neo-Thatcherite rhetoric and concentrate on affordability and delivery.

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  • It takes non-politicians to spell out the pragmatic reality that while government, in fact all of us, depend on housebuilders and residential developers to provide housing, there is no formal partnering between private industry and public need. Indeed, if housing really is infrastructure then all political persuasions have failed to grasp the opportunities but also the structural failings. Starting with the planning system which sees record underinvestment, undermanned departments, under-skilled officers, medieval timescales and fragmented guidance, how can we expect to push more planning consents into construction? Why in the last 20 years have we failed to place clear housing demands to private developers in return for clear public benefits? Why have we failed to clarify affordable housing in a county or borough wide policy rather than a site wide negotiation on viability? And why do we allow changing of agreed planning consents, the selling of consents with their added value and delayed implementation when we could have a contractual undertaking on the provision of homes in return for a permission – like a development license. And why, oh why, if there is a housing crisis is nobody panicking?

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  • All good comments. Every organization concerned with housing has claimed there is a crisis for several decades. A permanent condition is not a crisis. What we have is a shortage that needs to be dealt with in a rational planned manner. Crisis is the situation for the suddenly homeless. The two are connected, but not identical.

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