The new report from IPPR, the progressive policy think tank, reveals that the delivery of affordable housing has fallen short by 50% over the past three years and that the scale of unaffordability in London’s housing market has never been greater.
Darkening the picture further, are findings that affordable home ownership products are far from helping, being out of reach for many Londoners, including those in full time work.
With the government announcing its plans for a Green Paper on social housing, the new research highlights the need for a fresh look at the definition of ‘affordable’ with it having lost all meaning in recent years and products like the government’s starter homes being unaffordable except to the highest earners.
The report calls for the government to give powers over property taxes like stamp duty to the mayor of London, to devolve the funding for London Help to Buy, and new powers to buy land at closer to use value, to help tackle the affordability crisis.
The report finds that:
- A couple with a child (one working full time and the other working part time) on lower earnings (£30,000 a year) would find all affordable home ownership products unaffordable. On a middle income (£42,000), shared ownership would be affordable in six boroughs, while London Help to Buy would be affordable in one
- A single person working full time on a low to middle income would find all affordable home ownership products in the capital unaffordable, with them only becoming affordable in 11 boroughs at earnings of nearly £50,000 a year
- For a couple (both working full time), far more products come into reach – shared ownership is affordable in over a third of boroughs for those on lower earnings (£48,000) and in the majority of boroughs for couples on median earnings (£66,000)
- Starter homes are particularly ineffectual, being accessible to only those on the very highest incomes, including a couple with one child on higher earnings or a couple without children working full time on median earnings (but only in five boroughs).
The majority of affordable housing schemes are only accessible to those on higher dual-incomes. With the housing crisis reaching up the income scale to increasingly affect those on low to middle incomes, this has become a major challenge for those living in the capital.
It is essential the housing crisis is tackled with urgency addressing both the under-supply of housing and the unaffordability of schemes intended to help those on the lowest incomes join the housing ladder. IPPR’s report recommends that:
- The government increases the London mayor’s subsidy so that more affordable homes can be built in the capital – over time this grant should be replaced by devolved powers allowing the mayor to keep property taxes including stamp duty and the funding for Help to Buy should also be devolved
- The mayor and London boroughs should pursue the devolution and implementation of reformed compulsory purchase orders, as committed to in the Conservative Party manifesto, to enable them to buy land at a lower value and fund affordable housing at lower costs
- A clear affordability measure linked to incomes is developed and used to show at what income level housing schemes become affordable – this measure should be used to decide which schemes are subsidised with funding withdrawn from all that are unaffordable to those they are designed to assist
- Innovation should be encouraged, helping to solve the housing crises through new and alternative products.
Luke Murphy, IPPR senior researcher, says: “The government’s announcement of a Green Paper on social housing is welcome, but it mustn’t use it as an excuse for inaction now. Over the past three years, only half the affordable homes needed have been delivered in London. The chancellor should use the Autumn Budget to give London’s mayor additional money and power to deliver the homes our capital city needs.
“But those homes must also be genuinely affordable, our research has found that many affordable home ownership or subsidised housing products like Help to Buy, are out of reach for many of those they are designed to help.
“The government should devolve powers over property taxes like stamp duty and give the mayor the power to buy land at a cheaper price to help build the affordable homes that Londoners need. A new measure of affordability should also be developed to ensure all affordable homes to rent and to buy are in reach of Londoners on low to middle incomes.”