Nearly two weeks ago, in a shock surprise to the pollsters, the Conservatives won a majority in the Commons when a hung parliament had been expected. They gained 24 seats, taking their majority to 331 – a result no one had predicted. Much has been said over the last few months by each party to pull voters in their direction; but it’s safe to say that London and the UK’s housing crisis has been one of the topics high up on the agenda. All parties pledged to build more houses, some promising more than others, but nowhere is this more important than in London. Since it is the capital of our nation and our financial centre, the city sees more economic migration than the rest of the UK. In turn, this has meant that as far as property is concerned, London stands alone in its ‘housing bubble’ and has seen prices double in less than 10 years.
For many living in London, the prospect of owning a home is slim to none. Even the cheapest of flats seems to be on the market for around £300,000 and a full-blown family home can cost a million or more. This has forced many to the rental market, and since private property and owning one’s own home is such a big part of the English dream; this problem tends to stick in the throats of many people. This is especially true for the children of the baby boomer generation who, at the very least, had it easier in this area of life. Over the last few years much has been made of the gentrification of London that has seen prices rise as foreign buyers rush to snap up prime London property and those on lower incomes have gradually been squeezed out of certain areas. However Hammersmith estate agents, Lawsons and Daughters mentioned it’s important to remember that this isn’t the sole reason for our current housing problem.
The short answer to the problem is that London must build more houses, and we must do it quickly. London’s population is booming and there’s a shortfall. It hasn’t always been this way; during the 1920s and 1930s, the UK saw a spate of rapid house building and there was another spike in the 60s and 70s. This was because of competitive house building by both the Labour and Conservative governments and a relax in planning laws that allowed local authorities and housing associations to build homes on a grand scale.
It would seem that for the third time in 100 years we have entered into a political competition again to build houses. It’s the lack of building over the last 30 years that has pushed younger people out of the market, the so-called Generation Rent. Now that the Conservatives are in power, they can no longer claim that they are held back by the Liberal Democrats in coalition, and the public will be expecting them to keep their promises on housing. Of the 200,000 houses per year that they have pledged to build, 42,000 have been promised to London. This is crucial when you think that for approximately 10 years the capital has on average only seen 24,000 (even under the boom years with a Labour government). However, this 42,000 annually still sees London with a short fall of approximately 6,600 if it’s going to try to make up for the lack of building over the last 10 years. If we really want to put a dent in the problem and make housing affordable for almost all, then the total needed is even greater at 62,000 houses per year for the next 10 years.
The Conservatives have been making all the right noises when it comes to the housing market, no rent controls, obviously no dreaded mansion tax which for the last few months has stagnated the luxury property market. It almost brought it to a standstill as investors waited for the outcome of Thursday’s general election and held off from buying or selling. They have promised to extend help-to-buy until 2020 which allows buyers to purchase houses with a 5% deposit backed up by a 20% loan from the government and have introduced a version of Mrs Thatcher’s right-to-buy scheme which saw council tenants gain the right to buy government housing. They have also pledged to build 100,000 new starter homes on brownfield land. These houses will be sold off cheaply to first-time buyers under 40, thanks to local authorities selling the land off at a discount to developers, who in turn must pass on the 20% saving to the consumer.
All of these schemes will apply to London of course, but perhaps London needs something extra special if it is going to see an end to impossible rents and unattainable houses. We’re just over a week into their five year term, who knows what they will pull out of the bag over the next five years? If they can solve this problem there may be no stopping them in 2020.
Image CC: Julie Kertesz