London Councils publish ideas to meet London Housing Challenge

The 'London Housing Challenge' paper sets out a range of policy solutions following an analysis by the group of official housing statistics which revealed that 809,000 new homes will need to be built in London by 2021 to meet demand. 

The group, which represents the capital's 33 local authorities, said that current housing supply levels suggest that there will be a deficit of 559,000 homes by 2021. It said that such undersupply will put London's future status as a global city at risk while adding "huge pressures" to Government and individuals' budgets.  

Ideas set out in the paper include providing large scale builders with greater financial stability in the form of long term contracts based on building more homes. This would make it safe for builders to expand and could lead to "significant" investment in developing their delivery capacity, the paper said. 

An 'undeveloped land tax' should be levied on land with planning permission for housing if only 5% of the permitted homes were started each year. This could lead to an additional 26,825 homes being built over a five year period, the paper said. 

The paper also suggested lifting the "artificial cap" on councils borrowing against their housing stock to allow councils to borrow up to prudential limits and build more housing themselves. 

Building on green belt land near transport connections would promote sustainable suburban development, the paper said. It said that if the land around the 11 Ttube and railway stations in London which are in the Green Belt was developed to a ten hectare area, more than 7,875 new homes could be delivered. "Where green belt has failed as a planning tool, it should not block the sustainable development of much needed new homes," it said. 

Small scale builders' contribution to the overall housing supply could be increased if payment of the community infrastructure levy was made more flexible, including allowing payments on completion of a development or within six months of a property sale, the paper suggested. 

It also said that policy should be geared to increasing the levels of institutional investment in the private rented sector. If UK institutional investors invested just half of German levels, which were at £9.3 billion in 2012, this could fund the construction of 25,000 additional homes per year.

“The news that London needs almost a million homes by 2021 is a scandal - the last time we faced such an acute housing supply crisis was after the Second World War," said London Councils executive member for housing, Lewisham Mayor Steve Bullock. "This is a long time coming and the capital’s future prosperity is on the line.” 

“Rising housing costs are not only a problem for those struggling to rent but for any Londoner wishing to buy their own home.  If the housing crisis is not solved, costs for the London economy will continue to spiral. More working families will struggle to rent and to buy, more people could be forced out of the capital and homelessness is very likely to go up,” Bullock added. 

London Councils said that it will be working up more detailed briefings on specific policy ideas to move the debate forward once it receives responses on the discussion paper.