The cost of housing in London is failing its citizens

6th Mar 2013

Rising homelessness, waiting lists and house prices continue to afflict the London housing market, says Future of London director Jo Wilson.

Rising homelessness, waiting lists and house prices continue to afflict the London housing market, says Future of London director Jo Wilson.

A new report published by JRF considers the affordability pressures in London’s housing market. With these pressures set to increase it calls for a new, sustainable delivery model for affordable housing in London.

London is an increasingly unaffordable city in which to live. In 2012, it was ranked the 13th most expensive city in the world, moving up three places. Its population is already higher than the figures projected for 2016 – leading to estimates that London could be a 10m megacity by 2030.

This all puts extra pressure on the cost of housing in the capital, with the statistics showing that London is currently failing to meet this fundamental need of its citizens. As the study shows, 2011/12 saw:

  • A 27 per cent increase in homelessness on the previous year;
  • 366,613 households on housing waiting lists, an increase of 73 per cent increase over the previous 10 years. In some boroughs, such as Newham, the housing waiting list comprised 35 per cent of all households.

Meanwhile, first-time buyers in London face paying 20 per cent more of their salary on mortgage payments than the rest of the UK.

Increasing supply must be a major part of the solution. However, as the economy continues to dwindle, it would be unwise to expect public subsidy for housing to return to past levels in 2015, or indeed the foreseeable future. The Affordable Rent Model was brought in by the Homes and Communities Agency (HCA) to plug the funding gap for affordable housing provision, but it is not without its challenges, even in London where the market is more buoyant than most.

London councils are taking advantage of recent reforms to the Housing Revenue Account, increasing the borrowing capacity of stock-owning councils through which they can build new homes. They are generally being proactive with their assets and willing to take some risk in order to face these challenges. Whilst the Greater London Authority works to find a cross-London solution to the challenges of housing provision, boroughs need to continue to deliver in innovative ways.

The debate continues on whether we would be better off building more housing at the potential cost of failing to reach those in the most acute circumstances. This is an ethical dilemma, with the potential for major consequences on London’s demographic make-up. If lack of public subsidy is the insurmountable challenge, the findings of the London Finance Commission, due to report to the Mayor in May, could provide some answers.

Clearly an urgent policy response is required. As the next affordable housing programme is developed, London practitioners must work together to achieve consensus on the key elements of a sustainable delivery model for affordable housing in the capital.