Developers are not the answer to London’s housing crisis

CROYDON COMMENTARY: Borough councils, including Croydon, have leant heavily on speculative developments to build new homes. But London needs a far more radical approach, according to CHRISTIAN WOLMAR, who is seeking selection by Labour to be the party’s Mayoral candidate

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Christian Wolmar: London’s councils need radical help to build homes for Londoners

The London Labour Housing Group holds its hustings for the party’s mayoral candidates this Thursday. It will be a fascinating hustings because housing is the central issue facing Londoners at the moment. It will also be interesting because none of the candidates have really been tested on their housing policies.

What is clear to me is that developers are not the solution to our housing problems. The reason is a little-known thing called “viability”.

That’s why a radical council-led social housing building scheme is one of the core policies of my campaign.

But first, let’s look at what is happening on the ground:

Lambeth Council has a 40 per cent affordable housing target in the borough. An intuitive way to deliver this ambitious but desperately needed target is to ensure that 40 per cent of all new developments are affordable housing. Not so for the high-end Keybridge House development in Vauxhall – of the 419 new homes, a mere 19 will be affordable – that’s just 4.5 per cent.

What is worse is that the story is the same across London. Just down the road, the ultra-luxury (and ultra-lifeless) Nine Elms development in Battersea will see the development of 491 flats, the vast majority of which will all cost more than £1 million. How many affordable houses? A shade better than Keybridge House with a paltry 52, just over 10 per cent.

The trend is the same across London. In March the Greater London Authority released figures showing the number of affordable homes completed is now at a six-year low, despite annual pledges by Boris Johnson to build some imaginary number of affordable homes.

Why do we seem incapable of building enough affordable homes?

Part of the answer is the cost of land in London. It is just too lucrative for developers to do anything but maximise the number of full-value properties they sell, even with subsidies. That is understandable but it still does not explain why they are able to negotiate such low numbers of affordable homes in new developments.

For Sale and To Let signsThis all spins on “viability”, the “get out of jail free” card for developers.

Shrouded in a mist of legalese, viability appraisals provide the reasons why developers are simply unable to deliver affordable housing (or other worthwhile community amenities for that matter). Oliver Wainwright described viability wonderfully in a Guardian article last year.

“Presented as a precise science,” Wainwright wrote, “viability is nothing of the sort; it is a form of bureaucratic alchemy, figures fiddled with spreadsheet spells that can be made to conjure any outcome desired.”

This is why developers simply cannot be the solution to our housing crisis. It is just too easy for them to summon a viability demon to ward off the requirements set by London’s councils. The demon always wins.

I spoke with a former Labour councillor from Brent who told me councils simply do not have the resources or expertise to challenge viability assessments. “When I was on the council developers would bring in the piece of paper and the number of affordable houses would shrink. It is not a feasible way of delivering the affordable homes we so vitality need.”

As the next Mayor of London, I would tackle the issue of viability assessments. One way of doing this is to empower councils to start their own social housing schemes. Lifting the borrowing cap and allowing councils to build their own housing stock once again will cut out the viability assessment. Developers can either chose to undertake a council’s contract or not. It is a bit like the way the NHS negotiates favourable drug prices.

Almost all of Labour’s candidates have also had the idea of some sort of housing development corporation. But my Homes Delivery Agency will be designed in such a way as to tackle viability head on. It will have the expertise to assess these reports; it will have the teeth to say no; and it will have the means to deliver its own housing.

The developer-led scheme at Nine Elms is self-styled as the “greatest transformational story in the heart of London”. That is not true. It is just vacuous marketing speak. What is true, however, is that Nine Elms is emblematic of what is quite possibly the greatest transformational story in London’s history – the gutting of the capital’s soul by forcing ordinary people out of the city through sky-high house prices and a lack of high-quality and genuinely affordable housing.

It is time for this to stop.

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10 Responses to Developers are not the answer to London’s housing crisis

  1. So much of the new housing in and around London is comprised of flats. Standards may have improved from the 1960’s but are these really suitable for families with children? If you share this view the next question is where in London are we building homes for families – thats houses with gardens as far as I’m concerned?

    • In answer to David Wickens’ question, Compulsory Purchase Orders could be issued on low-density housing areas in Croydon. These inefficient land users in places like Croham and Heathfield could then be bulldozed and replaced, not by high-rise concrete blocks, but by low-rise family homes with gardens. The rich former occupants can move to the non-social housing flats in tower blocks in up-and-coming city centre areas like East Croydon or Nine Elms.

      • davidjl2014 says:

        That’s an absurd idea and you know it will never happen. Maybe it will if people like you stand in the next Council elections and win. So go for it. But hang on… how many Monster Raving Loony Party Councillors are there currently in local town halls? ( Let’s exclude the UKIP Councillors before you reply).

        • I was being deliberately preposterous, I admit. But my proposition is little different to what happens when CPOs are served on people’s homes, as will be the case if a new runway is built at Heathrow. It’s also happening without the compulsion, witness the transformation of Pampisford Road from one being lined with posh big houses and gardens into one with loads of flats. Tories in the south of the borough campaign and protest if plans are submitted for anything of that ilk, but you can’t stop progress.

          • davidjl2014 says:

            A very valid point and I totally agree with the Heathrow situation. But not all Tories are evil, just the same as not all Socialists are evil. We need to live and let live in this country and comprehend that some people will always have more in life than others. However, just because you live in a big house doesn’t necessarily indicate you vote Tory. I wanted to marry Raquel Welch when I was younger, but eventually realised that only children get what they want! What we want through our personal political beliefs rapidly becomes more and more insignificant as we grow older and the disappointment is what you quite rightly describe as “progress”.

    • davidjl2014 says:

      Indeed, yet attacking Private Landlords as the Labour Party in Croydon are doing at the moment with the introduction of compulsory Licensing is not the answer either. Especially when most of the topics they wish to eradicate are imposed on the community by their own tenants!.
      The key is to build affordable housing and review the mortgage practices. The mortgage questionnaires issued by the banks recently have become so extensive, they almost want to know what you eat for breakfast! Such is the fear to lend money to people who they think can’t pay it back after charging extortionate interest rates. On the other hand the developers will certainly build properties where they can make the highest return, you can’t blame them for that. But what we can do is blame the Councils for letting them build them in the first place! And that definitely includes this borough. The audacious devolvement currently being built in Croydon at the moment will not help those in need of social housing whatsoever. And that’s a public disgrace.

    • Cane Hill. Boris gave away a chunk of public property to a commercial developer, who’s going ahead to build mainly 3-, 4- and even 5-bedroom houses, but without providing any public infrastructure, such as a school, or a GP’s surgery (the council may be forking out for that), or even a proper access road.

  2. Is the housing market actually as bad as people are saying? Check out our blog post with information from NAHB talking about the 2015 housing forecast!

    • So the House Builders’ Association pat themselves on the back and say they’re doing a good job.

      Next you’ll be telling us that bears perform their daily toiletry habits in wooded areas.

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