Affordable housing disputes are ‘costing London homes’

New report cites Labour boroughs – and Sadiq Khan – as holding up badly needed developments with disputes over affordable housing.

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A new report from a Tory MP ups the ante on home building in London, saying the number of housing starts has “gone backwards” under Sadiq Khan – citing evidence that an increasing proportion of those homes that are being built end up in the hands of foreign buyers.

Out today, the report – prepared by Croydon South MP Chris Philp and published as part of the Centre for Policy Studies’ ‘New Generation’ initiative – also features new research setting out the historic under-supply of homes in the UK across regions, and makes the economic and social case for home ownership.

With the average first time buyer having to save for 10 years to put together a deposit and home ownership rates falling among the young, the report – Homes for Everyone –  sets out detailed proposals for how to push housebuilding up towards the government’s target of 300,000 a year, and ensure these new homes end up with first-time buyers.

Headline findings include:

  • The gap between the number of new homes needed and the number being built each year now stands at 76,000 a year, an improvement on the figure of around 150,000 under Labour. Of these, some 40,000 per year are in London and another 10,000 each in the East and South-East
  • The cumulative housing shortage since 2000 has reached 343,000 in London and 96,000 in the South-East
  • Over a 25-year period, a home owner will end up between £100,000 and £300,000 richer than a renter. Owning is more beneficial than renting even if you assume zero real house price growth and sky-high investment returns on the money that would have been used for a deposit
  • In London, the number of housing starts has gone backwards under Sadiq Khan. There is also evidence that an increasing proportion of those homes that are being built are ending up in the hands of foreign buyers – and not just in the prime areas of Central London.

In London, the report says many Labour-controlled boroughs – and Sadiq Khan as mayor – are holding up badly needed developments with disputes over the extent of affordable housing.

Acknowledging it is ‘commendable’ to seek more affordable housing, the report says such an approach is not ‘sensible’ if it comes at the cost of preventing development entirely.

In London – as a contrast to the rest of the UK – the report’s statistics show housing starts actually declined by 23% in 2016/17 (the first year of Khan’s mayoralty) compared to 2015/16 (the last year of Boris Johnson’s).

The report also proposes that the UK follows other developed economies, such as Switzerland, Australia, Canada and Denmark, in favouring domestic first-time buyers – primarily by restricting to 50% the proportion of new-build developments over 20 units that can be purchased by people who are not UK-tax resident.

While welcoming the government’s work and progress, including the chancellor’s recent stamp duty cuts for first time buyers, the report – Homes for Everyone – makes a series of proposals for speeding up the planning system and tilting its outcomes towards first time buyers.

These include:

  • Merger of the Community Infrastructure Levy and Section 106 requirement for developments under 100 homes
  • Removal of the affordable housing requirement for developments under 20 units
  • ‘Pink Zones’ in which development will be automatically approved within certain parameters; fast-track planning approval and dispute resolution
  • Speeding up the disposal of public land; strengthening the government’s ability to act on housing issues
  • Promoting ‘staircasing’ agreements by which renters can gradually buy their homes over a period of years, at the initial price.

Philp said: “The government has taken huge steps to increase home building from the low of 125,000 a year left behind by Labour to nearly 200,000 today.

“But more needs to be done – we need to place home ownership at the front of the policy agenda and make sure that first time buyers get all the support possible to get onto the housing ladder.”

Robert Colvile, director of the Centre for Policy Studies, said: “Housing is the biggest domestic policy challenge we face – one that is blighting the lives of a generation of young people.

“This new report contains many ideas that deserve serious consideration if we are to make home ownership the norm for young people.”

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