A housing crisis in the capital?

Sir Steve Bullock reveals the particular housing pressures facing London and explores what the Government can do to better support the capital’s boroughs.


London needs to build 800,000 homes by 2021. This unnerving statistic – based on research by London Councils, which represents London’s 33 local authorities – should worry all those concerned about the UK’s future growth prospects.

A recent CBI survey found that its members now see the availability of affordable housing as the number one issue facing British businesses. London is at the centre of this debate, with house prices having increased fourfold since 1983, despite salaries rising by only 1.5 times.

Successive governments have failed to build enough homes across the UK and in London in particular: the average London rent for a two bed property is now 53% of the average single person’s salary, compared to 25% in the North East.

In my own borough of Lewisham, we are innovating and working closely with several housing associations to develop affordable housing for rent and shared ownership. For instance, over 100 Lewisham residents have expressed an interest in taking part in a proposed ‘self-build’ scheme.

Our London, a social enterprise, is bringing these residents into groups to help them to understand the options for self-build and support them to develop their ideas for the site. The idea is that the residents selected will currently be in social housing, or on the council waiting list, so the new housing reduces demand for social housing and cuts the waiting list further.

We are far from the only London borough investing: Islington Council aims to build 2,000 affordable homes by 2015, and Southwark Council has similar plans to rapidly expand its housing stock.

Yet sadly, given central government cuts to our budgets of almost a third since 2010, there is only so much boroughs can do to build adequate housing.

The Government needs to ensure its housing policy enables local authorities and their partners to build a range of affordable homes for those who can’t afford to buy privately. In London, this means not only social housing for those on low-incomes, but given home-ownership is out of reach for even many lawyers and doctors, shared ownership properties for middle-income families and professionals.

One thing the Government could do is to lift the ‘housing borrowing cap’, which places artificial blocks on councils borrowing sensibly to invest. Research shows this simple change in legislation could enable councils to build 60,000 new homes and create 19,200 jobs, adding 0.6% to GDP – at a stroke of the chancellor’s pen.

Likewise, the Government should reverse its outrageous decision to single out London for ‘top slicing’ New Homes Bonus funding. The New Homes Bonus – criticised by groups such as the National Audit Office for not showing it is delivering homes in the areas they are most needed – moved money away from local government’s revenue grant to encourage the construction of new homes.

The Government initially planned to take a slice of this money away from all local authorities to Local Growth Funds, but has since U-turned on this decision – except in
London. Given the extent of the housing crisis and that local authorities are best placed to support the construction of genuinely affordable homes, this is
shocking.

Housing is going to feature with the public in the next three years, with borough elections in May 2014, the general election in 2015 and the mayoral in 2016.


Sir Steve Bullock is executive member for housing at London Councils and the
directly elected mayor of Lewisham.

For more on housing in the Municipal Year Book click here: www.municipalyearbook.co.uk/my-myb/advanced-search (subscribers only). For more information about the wealth of local government data held in the Municipal Year Book, click here: www.municipalyearbook.co.uk/features

This is an abridged version of an article that originally appeared in MYB sister publication Local Government News. For more information about this publication, visit the LGN website.
www.localgov.co.uk/lgn