Priority actions for making homes affordable in the capital

We need to be clear, building more homes, especially high-cost ones on Green Belt land, is far from the most effective way to address the urgent issue of addressing the affordability of homes in London.

Key housing crisis facts

The relationship between housing supply and housing affordability is far from straight forward:

• From 2013 to 2023, London’s population increased from 8.4 million to 8.9 million = growth of 6% – source GLA data store

• This has been far outstripped by growth in the number of dwellings in the capital which increased from 3.41 to 3.79 million over the same period = growth of 11% – source office of national statistics

• Yet the average house price in London went from £333,332 in January 2013 to £549,112 in Dec 2023 = growth of 65% – source land registry – UK house price index

According to the Office for Budget Responsibility, even with major planning reforms: “More housebuilding will increase the housing stock by just 0.5% by 2029-2030 and only reduce the average house price by around 0.8-0.9%”. That’s the Government’s own forecast!

This isn’t a housebuilding crisis –  it’s an affordability emergency!

Instead, targeted action is needed on making more affordable homes available, meaning focusing in on the provision of social housing, plus establishing affordable routes to home occupation and ownership.

CPRE London has joined with the Just Space Network to create the action plan below.

Action plan for the housing crisis

To tackle the housing crisis, we need to:

• Protect social housing by ending Right to Buy in England and buying back homes previously sold. Only a tiny proportion of homes sold in this way have ever been replaced. Right to Buy benefits individuals but at the huge cost of reducing the availability of affordable housing for those who need it most. It generates short-term income for councils but at the cost of future regular income.

• Invest in a major new social housing building programme. Borrowing to invest in building social housing stock will pay off long term and be an income generator. When the Treasury has invested in building affordable homes in the past, the money came back, with profits. We need long-term thinking to override short term constraints!

• Establish a new National Empty Homes Programme as called for by Action on Empty Homes. There is need for incentives to rent out empty bedrooms or get whole empty homes back into use.  Bringing empty homes back into use is both an essential response to the housing crisis and a crucial step to achieving net-zero by 2050.

• Launch a new Housing Rights Bill to enable security of tenure, safe living conditions and well designed and carefully targeted rent control powers for regional and local authorities.

• Fund independent legal support for renters to take their landlord to court if they are living in substandard conditions or their housing rights are threatened. Inadequate housing provision threatens people’s physical and mental health and can not be allowed to go unchallenged.

We are spending more today on subsidising insecure, unaffordable private rents than we have spent on building ‘affordable’ homes in 35 years.

Investing in the actions described above will be cost-effective and will directly impact access to and protection of affordable homes, reducing benefits and housing bills – ultimately improving economic, social and health outcomes.

Wider issues that need to be considered by policy makers

• Planning permission should be granted on a use it or lose it basis.  More than 300,000 homes in London have planning permission but haven’t been built. That’s a 5 to 10 year supply of planning permissions and there are many more in the pipeline. Without putting a space in the ground developers benefit from an increase in land value that comes with having planning permission.  It is not in the interest of developers to build all these potential homes at once because this would bring down property prices which eats into their profits.  They can profit simply by holding on to land which has planning permission. Planning permission should be given on a ‘use it or loose it’ basis in order to help get these homes built!

• Targets should be set for building social and truly affordable housing, not housing as a whole so that everyone has access to decent housing for their household size affordable on their income.  This is basic need which needs addressing.  This housing should be built near shops, services and jobs and be designed in such a way that it incorporates nature rich green spaces.

• We need to reverse the cuts in government funding to housing associations over the last 15 years.  Alongside local authority social homes, housing associations offer the best prospect for delivering truly affordable homes.  

• Government should also explore the potential for growing private investment in housing associations from insurance companies and institutional investors with an ethical bent looking for long-term stable income.

• Maintaining and upgrading the existing affordable housing stock is key.  A huge failure in ensuring a reliable supply of decent and affordable homes has been the lack of investment in ongoing maintenance.  We urgently need to invest in improving the quality of the existing stock of affordable homes, by for example by making shared green spaces more inviting, and simply through vital regular building maintenance such as addressing the root causes of damp issues.

• We need to look at refurbishing and retrofitting housing and repurposing  other buildings, that have been allowed to become derelict or are not longer fit for their intended purpose,  and generate creative ideas for how these can be transformed and brought back into use.  This is far more carbon efficient than building from scratch. Currently there are several perverse financial incentives for demolition and rebuild over refurbishment.

• We need to permanently link Local Housing Allowance rates to the cost of living, so that more homes are affordable to Londoners on the lowest incomes.  This would be a fast solution to improving access to affordable homes for those who need it most.

• In London’s Green Belt Review it needs to be reiterated that the Green Belt is protected land on which development can only take place in absolutely exceptional circumstances – not including for building houses to be sold off at unaffordable prices!  Just leaving open the possibility of loosening of protection of Green Belt sites in the foreseeable future is likely to lead to increased ‘land-banking’, speculative buying up relatively low cost plots of protected land in the hope they will be released in future for development, with every incentive to fence them off and allow them to become fly tipped rather than invest in the sites as green assets of environmental and social value.  It is vital that Green Belt is not made a grey area! 

• Greater clarity about the purpose and value of Green Belt in the context of the climate and nature crises is needed.  We need to be clear that this vital bit of London’s green infrastructure needs to prioritise land-uses such as local food production, nature-based climate action, and recreation to support the health and wellbeing of those living in London or neighbouring areas.