a strategy for housing

This strategy has evolved from two starting points. The first was a collection of six essays written by housing professionals and academics that were included in Family Mosaic’s publication, London’s Housing: a crisis in need of a strategy.

The second was a conference hosted by Family Mosaic and attended by 50 leading London housing experts. This conference debated the three themes that are the focus of this document: demand, supply and existing stock.

At the end of the conference, participants voted on the themes they thought should be a priority.

Family Mosaic takes responsibility for promoting this strategy and is grateful for everybody’s contribution.

We hope it stimulates further debate.

preface

2 : London Calling

A strategy for housing : 3

A London housing strategy, that benefits London and Londoners.

Put simply, that is what we’re after.

But how, though, can we achieve this? And why, you might ask, do we need another strategy?

We need it because we’re frustrated by the short-term approach that is embodied in current housing policies.

We need it because of the stop-start nature of development.

We need it because, as professionals working across housing in London, we can see that housing is in crisis.

And this crisis will not be resolved simply by mouthing platitudes about the need to build more homes. It will be about intelligent planning and swift action.

Many who are adequately housed cannot see, or are unaware of, the problem.

But to the young, the poor and the vulnerable, the crisis is very real.

Take, for example, the young. For them, aspirational housing is a privately rented room in a shared house without a communal living space, and that will cost them more than 50% of their income. For them, social housing is something that happened to another generation, and is inaccessible. For them, home ownership – even though they are saving for a deposit – is becoming increasingly unattainable, as prices continue to rise.

introduction

A strategy for housing : 5

London has experienced housing crises before. After the Second World War, the capital was rebuilt, and thousands of people were provided with homes. In the 1960s, Cathy Come Home shamed a nation into action.

We need a similarly groundbreaking approach now.

We need a long-term strategy that takes the politics, but not the government, out of housing.

We need a different mindset.

Housing is one of the most critical elements of the capital’s infrastructure. Rarely, though, is it thought of in that context.

Housing plays a crucial role in the health, wealth and wellbeing of every Londoner’s life.

Housing fulfils one of our most basic human needs - the need for shelter.

Housing helps to define who we are.

More often than not, however, housing is discussed publicly in just one context: who can promise to build the most homes.

Our housing strategy for London is not just predicated on building more homes.

It’s also about how we can manage demand for housing more effectively.

And how we can make better use of London’s existing housing.

So that London can realise its ambition of becoming a prosperous, global mega-city.

And that all Londoners can find a place to call home.

Brendan Sarsfield CE, Family Mosaic

6 : London Calling

l architects;l business membership organisations;l consultants;l contractors;l developers;l Family Mosaic board members;l finance;l Greater London Authority;l homeless organisations;l house builders;l National Housing Federation;l peer organisations;l PR experts;l real estate consultants;l solicitors;l think tanks;l young people’s campaign groups.

who’s calling

The following sector partners took part in our conference to discuss London’s housing crisis (June 2014):

A strategy for housing : 7

the current situation

According to projected population growth statistics, London will be home to 9 million people in 2020, and 10 million by 2030. That is the equivalent of a new London borough every two years. Most of those will be aged between 20 and 30 years old, attracted by the continued growth in jobs in London.

To accommodate these new Londoners, we would need to build 50,000 new homes every year. This is far more than has been built in any previous year. Quicker planning, more effective use and allocation of land, and a more efficient supply chain: all will play a crucial role in achieving this target. Yet, if we want to deliver this level of housebuilding, the role of institutional and government investment as new and historic players will be critical.

Such a long-term strategy to solve London’s housing crisis, however, should not just be reliant on managing demand, and improving supply. Every night, as London goes to sleep, there are 1.8 million bedrooms that are empty. How, then, can we make better use of under-occupation, particularly in the owner occupied sector? How can we encourage the private rented sector to provide more homes at affordable rates? And what role can social housing play? The capacity is there: how can we make it work for Londoners?

This framework strategy outlines nine objectives that we believe will make a difference.

8 : London Calling

1 We need to target property taxes more effectively

Taxation is an effective way of managing demand, and the current taxes that we have in place are not working.

We need to rethink our approach to property taxes – including council tax, inheritance tax, capital gains tax, corporation tax and stamp duty – to facilitate a more flexible market that better meets Londoners needs and incomes. At the moment, all these taxes do is generate revenue for government. They need to be better targeted to support a housing strategy.

2 We need to invest in infrastructure in the suburbs

People will continue to come to London to work. If we want to affect demand we must encourage people to move out of London, so we need to support a more sustainable commuter lifestyle. So investing in infrastructure in the suburbs is essential.

This might involve investing in rail and other transport networks. It might involve investing in subsidised fares. It should also include investing in building new schools, GP surgeries and leisure facilities.

We want to make the suburbs more attractive, and more accessible, so we shift demand for housing away from central London. Crossrail will help to create new desirable housing areas, but what next?

3 We need to create jobs in the regions

One of the main reasons for people to move to London is for work. Supporting job creation outside London is one way of reducing the demand for housing in London.

What can London outsource without damaging our economy? Many companies outsource to improve focus. Can London do the same and help reduce the waves of people moving to the capital?

4 In addition

Other suggested policies include:

l creating new towns around London;

l facilitating flexibility in the housing market, especially for older owner occupiers;

l abolishing help to buy in London;

l reforming homelessness legislation.

demand:what needs to happen

A participant commented about taxes:

“Perhaps we should be clearer whether this is about ringfencing existing tax, or that plus changing the way we tax property – e.g. higher capital gains tax.”

10 : London Calling

1 We need to develop new products to encourage downsizing

There’s a huge number of under occupied homes, and bedrooms, in London: the issue is how we encourage people to downsize.

So we need to develop products that incentivise people to move out of their under occupied homes. For outright owner occupiers, this would enable them to realise some of the equity in their homes - many are cash poor, but asset rich.

In particular, we need new products for older people – not institutions, but exciting homes where people want to live. And as people are incentivised to move to these new homes, we envisage that there will be a chain reaction enabling many other existing and new tenants to move on, and into, more suitable housing.

2 We need to develop a campaign to win public support

Social housing is subsidised housing: it depends on government grant, and government payment of benefits, to exist. But it is also very necessary. If we wants this to continue, we have to show how we can make better use of our existing stock.

Then, and only then, will social housing stand a chance of engendering the long-term public support it needs to survive and prosper. And with this public support, it’s more likely that politicians will sign up to a long-term housing strategy for London.

3 We need to remodel existing properties to increase their density

London is a relatively low density city: we need to be far more inventive in the ways we use existing stock. Partly this relates to the need for more products to encourage downsizing and movement between tenures.

We also need to rethink the current housing design principles, and ask whether we could achieve greater density when developing properties and estates.

4 In addition

Other suggested policies include:

l new products for equity investment;

l greater regulation of the private rented sector;

l management rationalisation between housing associations;

l take steps to reduce energy costs;

l improve stock condition information.

existing stock:what needs to happen

A participant commented about Greater regulation of the private sector:

“We need to use regulation to find a way of enforcing the same working practices and ethics of good landlords onto rogue landlords in the private sector.”

A participant commented about Existing stock:

“The current focus on under-occupation by social tenants does prompt the question as to whether we could do more to reduce under-occupation by older outright home owners. There are roughly 7 million of them. If just 1% more moved per annum that would free up 70,000 homes – a big contribution to a stretched supply side. So what might be done? Clearly it must all be about incentives – no stamp duty paid if they move to a smaller home. Or allowing the costs of the move to a smaller home to be offset against any inheritance tax liability on the estate. The aim should be to nudge older owners to think about this and create incentives to downsize. We need to connect the debates between supply and older people’s housing options.”

A participant commented about Greater regulation of the private sector:

“Regulation needs to set mandatory, minimum standards. For example, a London-wide landlord register should only be available to those who meet a fit and proper person test. Those who don’t, or break the rules later, can be kicked off a register, lose their license, and are no longer able to be landlords. A similar system could work for letting agents.

In the private sector, a huge issue underpinning the problems that all renters face is a lack of security. Mandatory five year tenancies, which would still be breakable by a tenant as needed or by a landlord if they are selling the property, would start to address this.

Across the whole of the PRS, by and large, voluntary arrangements have failed. To improve standards, measures need to be legally binding – good landlords will comply, as will most others who follow the law, leaving a minority for local authorities to enforce against.”

12 : London Calling

1 We need to incentivise the release of land

Land is key to the supply of new homes. It has to be the number one priority. Whether it’s bringing forward more public land, the balance between greenfield and brownfield, or ensuring what is approved is actually delivered.

Without land, the debate about the type of homes we need to build is redundant, because access to land is essential to the development of all tenures.

We need to think differently. We need to set targets for local authorities: if these are met, then they should receive financial rewards. This will encourage them to make better use of their land and to be more adventurous and creative with their existing powers.

2 We need to move housing up the political agenda

Without the political will, homes will not be built. This was true in the 1950s, when building rates were highest. And it is true now.

We need politicians to stop talking the talk: we need them to turn their campaign promises into concrete action on the ground.

We need to take the political point-scoring out of housing.

Just as housing is part of our everyday lives, so it has to be part of the government, any government’s everyday policy agenda. A Minister for Housing should always be a member of cabinet.

If there is a political will behind building more homes, then it can happen. If it is relegated to the backbenches, then all we will be left with will be more pointless campaign platitudes.

3 We need to improve the speed of delivery

Major regeneration schemes take too long: from conception to delivery of new homes, the process is too protracted. Compared to our European and international competitors, our processes are archaic.

We need to speed up the process, while ensuring that community engagement is meaningful and effective.

We need to redress the importance of the need for housing against the can’t do culture of NIMBY-ism, especially in the suburbs. We need to stop saying, “yes, but…”.

supply:what needs to happen

4 In addition

Other suggested policies include:

l reduce the number of London boroughs, or at least reduce the number of planning authorities;

l place housing as part of local infrastructure;

l remove the focus on the barriers to build;

l balance foreign investment and public funding;

l tax profit at the point of sale for residential property ownership;

l improve the supply chain by supporting SME contractors, materials suppliers and the development of a skilled workforce.

A participant commented about The issue of subsidies:

“One issue we might need to think about is subsidies. The government has considerably reduced subsidy over the last five years: what will happen when housing associations are forced to pull back from housing for sale and that large amount of subsidy from Housing Associations then falls? How will the supply of new homes be affected in the future?”

A participant commented about Other policies:

“The number of boroughs unnecessarily over complicates house building: perhaps we should reduce the number of boroughs down to six? Or, at the very least, to advocate for greater collaborative working across London boroughs.”

From the list, the three key steps we believe need to be addressed as part of London’s housing strategy are:

1 We need to target property taxes more effectively

2 We need to develop new products to encourage downsizing

3 We need to improve the speed of delivery

This outcome from the conference and debate surprised us. The group were saying solving this problem is more complex than just talking about supply.

As we approach a General Election in 2015, we all need to build on these ideas and encourage politicians to grasp the challenge in front of them.

three key steps

14 : London Calling

CreditsWriting, editing by Matthew Grenier

Design by David Caines

For further information contact Joanna Birch:

T 020 7089 1046

M 07960 821 007

E Joanna.Birch@familymosaic.co.uk

a strategy for housing

October 2014