New figures released today by the Mayor of London, Sadiq Khan, reveal that London needs to build 66,000 new homes every year to meet its growing need and put right years of underinvestment.
The Mayor is calling on the government to commit to profoundly boosting the funding and powers available to London at the Budget on 22 November in order to meet this need – and as a first step return government funding for affordable housing in the capital to the level it was at in 2009/10.
The new figures of housing need, calculated by City Hall through their Strategic Housing Market Assessment, also suggest that 65% of these new homes would need to be affordable if they are to meet Londoners’ needs.
With the private sector alone unable to build this many new affordable homes, it serves as a stark warning that the capital’s housing crisis will spiral even further out of control without a profound new programme of government investment and action.
The Mayor’s draft London Plan, due to be published next month, is said to include strong new measures and set ambitious targets for every London borough to move towards this goal. This is roughly double the current rate of homebuilding, and goes alongside the Mayor’s strategic target for half of new homes to be genuinely affordable housing.
Boosting homebuilding to this level will require profound action from the government – including the devolution of new powers to London such as those over public land and allowing councils to borrow to invest in homes, and a massive increase in government funding for homebuilding and infrastructure. City Hall modelling suggests a requirement for government to increase funding for affordable housing alone in London to around £2.7bn a year – more than five times current spending levels.
Overall government spending on affordable housing in London – including the Prime Minister’s recent commitments – is well under half the amount spent in 2009/10 when the current government came to power and cut spending.
Last November, Sadiq secured a £3.15bn deal with the government to start building 90,000 genuinely affordable homes by 2021 – around £0.5bn a year. Recent announcements by the Prime Minister could see this rise to around £0.7bn – still well short of previous government spending that reached £1.75 billion in 2009/10 before being cut by the new government.
The Mayor is calling on the government to immediately restore affordable housing investment to 2009/10 levels at the Budget on 22 November, alongside a long-term commitment to increasing funding to the levels needed to meet London’s need. This must sit alongside additional investment in transport and infrastructure to unlock homebuilding, and the devolution of broad new housing and planning powers to London.
The Mayor of London, Sadiq Khan, said, “Londoners know better than anyone that there has been a systematic failure for decades to build enough new homes that are genuinely affordable.
“The housing crisis is a major factor in the high cost of living in the capital, as well as putting home ownership out of the reach of many young Londoners who fear they will never get a foot on the property ladder. In the worst cases it can affect social cohesion, cause poor health, and plunge residents into poverty.
“I cannot overestimate how terrible a situation we inherited. Successive Prime Ministers have failed to invest anywhere near enough in building new affordable homes. The previous Mayor stopped investing in homes for social rent altogether and cut the number of new affordable homes he funded to the lowest level since records began.
“We can all see the results – too many luxury penthouses that only the very wealthiest investors can afford and nowhere near enough homes within reach of ordinary Londoners.
“We have spent 18 months starting the marathon job of clearing up this mess – we’ve had to totally rebuild the housing system from the bottom up. I’m using every power and pound I have at my disposal to tackle this crisis head on, and I am today setting tough targets for every part of London to make its contribution. Many boroughs, housing associations, homebuilders and others in London are ready to step up – but we simply can’t do it on our own.
“This government keeps saying they understand the scale of London’s housing crisis, but these statistics prove they are just tinkering around the edges. It’s time for the Prime Minister to match her words with action and use the Budget to commit to the profound increase in investment and powers London needs to tackle this crisis once and for all.”
Kath Scanlon, London School of Economics, said, “The UK as a whole doesn’t have a housing crisis – London and the south east do. The crisis stems from strong demand and weak supply, and the Mayor’s new figures emphasise the scale of the shortfall. London’s elected authorities could do much more to address the housing issue if they had the tools that major cities in other countries take for granted – particularly around taxation.”
Paul Hackett, chair of the g15 – representing London’s biggest housing associations – said, “The new figures show housing need in London is even greater than previously understood. Now is the time to increase investment in affordable housing in London and to create the conditions to enable housing associations and other providers to build more homes. The latest housing need figures demonstrate the urgent need for a bolder and longer-term approach.”
Jonathan Seager, Executive Director, Housing, London First said, “These new figures show us that the housing crisis is worsening. It is now one of the most serious challenges facing business, preventing firms from recruiting and retaining the talent they need to grow and succeed.
“The only way London can significantly increase housebuilding is through additional government investment and the further devolution of powers to City Hall. Now is the time for all layers of government to work in partnership with developers to ensure London meets its housebuilding target.”