London Mayor Boris Johnson will call on the coalition to hand down a raft of powers to City Hall so London can avoid a housing crisis that would jeopardise Britain’s economic growth and global competitiveness.
In a speech at the Charted Institute of Housing on Wednesday, the Mayor will tell housing experts that London is best placed to deal with its housing shortage, not central government.
In order to tackle the crisis, Johnson will call on the government to let London keep stamp duty receipts on property sales so it can build a million high quality homes over the next 25 years. Legislation has already been passed to allow the Greater London Authority to invest in housing, prompting the Mayor to argue for this to be boosted by letting the GLA retain Stamp Duty Land Tax in full.
Alongside his stamp duty “ask”, Johnson will demand a range of other powers:
- Giving London boroughs more freedom to build homes. This would include removing the borrowing limits on town halls which severely restricts their ability to deliver new homes.
- A new affordable housing settlement for London from 2015 with rents reflecting incomes and within housing benefit levels.
- The transfer of surplus government land to City Hall to maximise development opportunities.
- Testing a new graduate-style housing product to encourage major employers to invest in accommodation programmes to help attract staff.
- Launching a new City Hall initiative with developers to identify housing schemes for the London Pension Fund Authority to consider for investment – an opportunity which would be extended to other pension funds.
London Mayor Boris Johnson said:
“Since I was elected London’s population has grown by 600,000 and is forecast to rise by a further million at least over the next 25 years. If we do not come up with a new plan to build the homes we need, this great city will suffer and the whole country will feel the consequences.
“What is needed now is a radically different approach which optimises City Hall’s role, unlocks the potential of the capital’s boroughs, allows developers including housing associations to up their game and creates a stable supply of land for housing.
“Even in the toughest of economic times London has shown that with fresh thinking it can deliver, with record affordable house building figures in my first Mayoral term. So I am calling on the coalition to give us the tools and we will solve the crisis, supporting and creating hundreds of thousands of jobs and boosting economic growth across the UK along the way.”
Naomi Heaton, CEO of property investment specialists London Central Portfolio, told LondonlovesBusiness.com that Johnson may be expecting too much in his ask for more money from the Treasury.
“Stamp Duty revenues are very London-centric. LCP identified in a report last month that, whilst the average national Stamp Duty is £2,500 this rises to a staggering £67,000 in London’s best addresses.
“At the same time, there are 354,389 families on the waiting list for social homes in London, showing that there is clearly a housing crisis and Boris is absolutely right to look at addressing the problem.
“However, with the Chancellor grabbing every spare penny for the Treasury’s coffers and with Stamp Duty increases in the last two Budgets, it is very optimistic to believe that Osborne will hand this money over to City Hall. Instead, LCP have hypothesised that it is far more likely that Osborne will increase Stamp Duty by 1% to 5% on properties over half a million and to 6% on properties over £1m. Any move by the Government to increase this Stamp Duty would be detrimental to the UK economy and already fragile property market and could result in net fall in tax take, which we estimate to be around £202m.
“For commentators who indicate that the property market is overheating, it is also important to note that the London property market is not homogeneous. Greater London, which represents the pulse of the domestic economy, operates entirely differently to the Prime Boroughs where values have risen steadily by 9% per annum since 1996 and continue to appreciate on trend.”
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