Home Property Sadiq Khan calls for drastic government action in Budget on housing crisis

Sadiq Khan calls for drastic government action in Budget on housing crisis

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27th Oct 17 2:58 pm

New figures reveal London needs to double its current rate of homebuilding

  • Mayor urges government to massively increase investment in London homebuilding back to 2009/10 levels at the Budget on 22 November
  • Government funding for affordable homebuilding in London is still less than half the amount spent in 2009/10
  • New analysis shows government funding for affordable housing needs to rise five-fold to £2.7bn a year
  • Sadiq criticises previous Mayor for not funding a single home for social rent in the year he left office

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 per cent 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, will include strong new measures and set ambitious targets for every London borough to move towards this goal (see borough breakdown below). 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.

Since taking office, the Mayor has pushed the full range of powers and resources at his disposal to their furthest extent. He has boosted affordable housing in the planning system from the record low of 13 per cent in planning approvals he inherited from the previous Mayor – with affordable housing across all planning applications in the first six months of this year hitting 38 per cent. He has also agreed investment in 50,000 new affordable homes, including those based on social rent levels.

When Boris Johnson was first given control of London’s affordable housing investment in 2012, there was funding for 1,687 homes for social rent. This figure dropped throughout his time in office to just 336 in his final year – and he left a pipeline of zero homes for social rent funded by City Hall when Sadiq came into office in 2016/17. (See table below)

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.”

 Boroughs Total 10 year capacity Annualised 
Barking and Dagenham 22,640 2,264
Barnet 31,340 3,134
Bexley 12,450 1,245
Brent 29,150 2,915
Bromley 14,240< /td>

Camden 10,860 1,086
City of London 1,460 146
Croydon 29,490 2,949
Ealing 28,070 2,807
Enfield 18,760 1,876
Greenwich 32,040 3,204
Hackney 13,300 1,330
Hammersmith and Fulham 16,480 1,648
Haringey 19,580 1,958
Harrow 13,920 1,392
Havering 18,750 1,875
Hillingdon 15,530 1,553
Hounslow 21,820 2,182
Islington 7,750 775
Kensington and Chelsea 4,880 488
Kingston upon Thames 13,640 1,364
Lambeth 15,890 1,589
Lewisham 21,170 2,117
LLDC 21,610 2,161
Merton 13,280 1,328
Newham 38,500 3,850
OPDC 13,670 1,367
Redbridge 19,790 1,979
Richmond upon Thames 8,110 811
Southwark 25,540 2,554
Sutton 9,390 939
Tower Hamlets 35,110 3,511
Waltham Forest 17,940 1,794
Wandsworth 23,100 2,310
Westminster 10,100 1,010
Total 649,350 64,935

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