The housing sector in London is facing a shortfall of supply, seismic changes to affordable housing funding and provision, and ongoing financial challenges from mortgages through to local authorities.
The key points raised at the latest NLA conference on the subject were:
London mayor Boris Johnson is likely to cite record affordable housing completions – 16,000 during 2011/2012 and 50,000 over the last four years as part of his mayoral election campaign.
The GLA forecasts a similar level of completions up to 2015.
The GLA has worked hard to ensure exemptions from the 80% rule on affordable housing (where renters must pay 80% of the market rate) in cases such as large family homes – GLA interim director of housing David Lunts estimates that the average under the new programme across London will work out nearer to 65%.
London house prices are twice the national average, with rents increasing by close to 20 per cent, year-on-year.
Even in the same postcode, rents can vary by 50%.
There are fewer home-owners now than there were a decade ago ·
It is, however, very unlikely we will see a major recovery in mortgage lending. ‘What we’re facing is the new norm’.
The average salary of a G15 London housing association tenant is £15,000.
Debt is a key issue. The G15 has to raise £2billion, while the affordable housing sector needs to raise some £24 billion in private debt - or around 30 per cent of all UK bond issues.
London gets £628m of £1.8bn over the next four years, with which Grant Shapps wants to build 150,000 homes, 22,000 of which will be affordable.
The Vauxhall Nine Elms Opportunity Area is on course to secure around 19,000 homes rather than the projected 16,000, according to Wandsworth assistant director of planning and environmental services Seema Manchanda.
London property is seen as a safe home for overseas investment, with 60% of all investment into the capital being from countries such as Malaysia, Singapore, China and Hong Kong. Questions arise about how this helps indigenous Londoners or those who want to get onto the property ladder. The ratio could get bigger still if China relaxed its policies on overseas investment.
London’s ability to move and react quicker to the housing market will be significantly improved when it is shortly free from having to apply to Treasury or other departments for money to spend, or be conditional on the housing market elsewhere in the UK.
The GLA will be producing an SPG on affordable housing and an Early Alteration to the London Plan in the next month, making it clear that, essentially, the sector will not just be social rented housing but affordable and intermediate rented housing as well.
Selcted quotations from the event:
‘We need a proper strategy for housing – I’m afraid I don’t think we have one. I think we have a minister who has a strategy for affordable housing but I’m not at all convinced that I could tell you what his strategy for housing more widely might look like’ – Keith Exford, chair, G15 and chief executive, Affinity Sutton
‘Anyone who thinks we can provide subsidised housing without subsidy, as some of the think tanks and some of the politicians seem to believe, are deluding themselves. If I could pull a rabbit out of a hat to provide housing at below market price without some sort of subsidy – be it free land or grant or whatever it is, then I wouldn’t be standing here in front of you. I’d be on my yacht in Monaco or somewhere like that telling other people how to do it’ – Keith Exford, chair, G15 and chief executive, Affinity Sutton
‘The situation on first time buyers hasn’t got any worse, because it couldn’t get any worse’ – Jennet Siebrits, head of residential research, CB Richard Ellis
‘Let’s get building; let’s get mortgages, and let’s get confidence. We feel at the G15 that there’s work to be done in making the economic case for housing. We think the argument is winnable, but we can’t find the data to prove it’ - Keith Exford, chair, G15 and chief executive, Affinity Sutton
‘We should remember that from this CSR about £3billion is going to come for affordable housing. Most of it is going into new homes, and this part of the most difficult CSR negotiation in living history….Before we give up on things we should assume that around £3billion should be our baseline going forward. So we shouldn’t assume that there will be no public money in the future – the important thing is to lobby for it and make sure it deals with the problems we have got outside of those zone 1 prime markets’ – GLA interim director of housing David Lunts.
The findings came from the NLA’s latest conference on the sector: Delivering London’s Housing Needs, which took place on 13 October 2011.