Khan – 65% of London Housing Needs to be Affordable

Guardian

The mayor of London has accused property developers of constructing “too many luxury penthouses that only the very wealthiest investors can afford” and insisted the rate of affordable house building has to significantly increase.

In a new assessment of housing need, Sadiq Khan said the pace of construction should increase from 29,000 homes a year to 66,000, insisting that 65% of these homes needed to be affordable, far higher than the current rate of 38%.

“The housing crisis is a major factor in the high cost of living in the capital, as well as putting home ownership out of the reach of many young Londoners who fear they will never get a foot on the property ladder,” Khan told the Guardian. “In the worst cases, it can affect social cohesion, cause poor health and plunge residents into poverty. I cannot overestimate how terrible a situation we inherited.”

City Hall calculates that a new approach will require a major shift in strategy, switching the emphasis from building blocks of luxury apartments in central London to constructing more family housing in the cheaper suburbs.

Between 1997 and 2016, London’s population increased by a quarter – an extra 1.7 million people – but only 370,000 homes were added to the stock. One result has been a rise in the number of families sharing with other families, which now affects 470,000 households.

The figures are contained in a stark assessment of housing need that will form the basis of the London Plan, a five-year planning strategy due to be published next month.

Khan said: “Successive prime ministers have failed to invest anywhere near enough in building new affordable homes. The previous mayor [Boris Johnson] stopped investing in homes for social rent altogether and cut the number of new affordable homes he funded to the lowest level since records began.”

Khan revealed that no homes for social rent – the cheapest available – were built in London in the last year of Johnson’s mayoralty. Just 29,000 homes a year of all types were built between 2013-14 and 2015-16.

The mayor is using the figures to pile pressure on the chancellor, Philip Hammond, to include in next month’s budget a dramatic increase in state subsidies for affordable housing in the capital from £500m to £2.7bn a year.

The new strategy is set to focus on building more homes in outer London and will include a presumption in favour of development on small sites in suburban town centres. Khan is also pushing for greater powers from the government to force unused sites, including public land, into use for housing, including speeding up compulsory purchase orders.

Despite City Hall’s assessment that 65% of all new homes must be “affordable” – which Khan defines as being rented for no more than a third of average earnings, or under shared ownership schemes – insiders concede this is unlikely to be possible. Khan is expected to set the target for affordable housing at a more achievable, but still highly ambitious, 50% in the London Plan.

There has been a growing anger at the number of luxury developments, especially among people struggling to afford starter homes or to rent cheaply. One totemic example is the 50-storey St George’s Wharf tower beside the river Thames at Vauxhall where two-thirds of homes were last year revealed by the Guardian to be in foreign ownership, with a quarter held through secretive offshore companies based in tax havens.

Concern spread to the suburbs earlier this month when it emerged that the London borough of Redbridge had agreed to allow the supermarket firm Sainsbury’s to build 683 homes, only 4% of which are guaranteed to be affordable.

Last month, Theresa May announced an extra £2bn for council housing nationwide, but was accused of tinkering when it emerged that it would only result in an extra 5,000 homes a year being built.

In common with town halls across the country, Khan is lobbying for councils to be allowed to borrow to invest in homes. The communities secretary, Sajid Javid, said on Sunday that the government might authorise extra public borrowing to fund infrastructure to deliver more housing. According to some reports, his department believes £50bn is needed. However, Hammond told the Commons this was not government policy.

Andrew Boff, the Conservative deputy chair of the London assembly’s housing committee, warned that Khan’s approach of increasing the proportion of affordable homes needed in each development was putting developers off building any housing.

He believes increasing the whole housing supply would result in lower prices and therefore greater affordability. “He would see more homes built if he had a lower figure for affordable homes,” Boff said. “If you increase the number, the price will go down.

“Despite the rhetoric, he has managed to start 20% fewer homes a year than his predecessor after 18 months in office. This directly goes against his promise in his manifesto that each year would be an increase in the number of homes being built.”

City Hall insiders point out that this is a result of the low number left in the pipeline by the previous Conservative administration.

Jonathan Seager, the executive director of housing at London First, the business lobby group, said: “These new figures show us that the housing crisis is worsening. It is now one of the most serious challenges facing business, preventing firms from recruiting and retaining the talent they need to grow and succeed.”

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Javid and Hammond Row in Public over Housebuilding Funding

Huffpost

Philip Hammond has slapped down a Cabinet minister’s call for the Government to borrow billions to fund a housing boom.

On Sunday, Communities Secretary Sajid Javid said now was the time to borrow cash to help build the 300,000 homes a year the country needs to solve the housing crisis.

Sources then told The Sun Javid was hoping for a £50billion war chest from the Treasury to kick-start a building programme.

But asked to confirm if this was Government policy in the Commons today, the Chancellor said: “No.”

When asked by fellow Tory MP James Cartlidge if he would “resist the temptation” to fund new spending in the Budget “by billing our grandchildren”, Hammond replied: “It is not responsible to make so-called hard choices by loading the price on to the next generation and the generation after that.

“We have to make the difficult decisions and we have to bear the consequences of those decisions and at £65,000 per household our public debt in this country is still far too high so I can confirm to him that we will continue with the plans that we have announced to reduce the deficit in a measured and balanced way to ensure that debt is falling as a share of GDP.”

The comments come a day after the Prime Minister’s Official Spokesman refused to back Javid’s call to borrow to invest in housing, saying he would not comment on “Budget speculation.”

Javid made the call for extra cash during an interview on the BBC’s Andrew Marr Show on Sunday.

He said: “We are looking at new investment and I am sure at the Budget we will be covering housing.

“What I want to do is make sure we are using everything available to deal with this housing crisis and where that means, for example, where we can sensibly borrow more to invest in infrastructure that leads to more housing being built, and take advantage of some of the record low interest rates, I think we should absolutely be considering it.”

Liberal Democrat leader Vince Cable, who asked the Chancellor in the Commons if borrowing to invest was now Tory policy, said: “The government’s housing policy is in chaos.

“There was a brief shaft of light when we thought the Treasury had retreated from its stubborn refusal to finance public sector housebuilding through borrowing.

“But sadly Sajid Javid has been slapped down by the Chancellor, who denies all knowledge of the commitments that the Secretary of State made over the weekend.

“This is bad news for families struggling with soaring rents and younger people increasingly shut out of the housing market.

“We’re left with the absurd situation where councils can borrow from the Treasury to engage in property speculation on the other side of the country, but can’t borrow to build more housing for their own residents.”

Labour accused the Tories of rowing in public over the contents of the Budget – set to be announced on November 22.

Shadow Housing Secetary John Healey MP said: “It may be good spectator sport but it’s bad for the country when Conservative Ministers have their arguments in public.

“The Communities Secretary is publicly begging the Chancellor for more money because Tory cuts have forced new affordable housebuilding to a 24 year low.

“Only Labour has a proper plan to build 100,000 genuinely affordable homes a year and fix the housing crisis.”

While Javid’s call for extra cash seems to be falling on deaf ears, he is pushing on with an eight-week review into home buying – announced on Sunday.

That comes alongside another review into social housing – something described by Javid as “a wide-ranging, top-to-bottom review of the issues facing the sector”. 

Government to Borrow to Directly Commission Housebuilding

Some questions

  1. On what land?
  2. Small sites good, but 10s of thousands of them – from government?   Very bureaucratic.   The most efficient model – the continental model is for the government to buy large sites at existing use value and split them into smaller sites and plots for a more competitive housing market.  This could be the opposite – the government pitching in for the same sites as everyone else.  Driving up prices or getting the duff left over plots the big housebuilders don’t want.
  3. Wont the oligopoly of land ownership remain, and owners pushing for higher rent seeking knowing the state will act as a developer of last resort
  4. The state acting as a developer of last resort is a good idea, in macro terms, as a means of preventing underbuildings and property crashes and recovering from recession in bad times.  Danny Alexander pressed for this at the Treasury using large government owned sites.  A revised version of this offers the best model – ultimately wont work without value capture.

 

Telegraph

The Government will borrow billions of pounds at record low-interest rates to invest in hundreds of thousands of new homes under plans being considered by ministers.

Sajid Javid, the Communities Secretary, said that the housing crisis represents the “biggest barrier to social progress in our country today”.

He said that ministers are examining plans to “invest for the future” and that the Government wants to ensure it is “using everything we have available” to deal with the housing crisis.

The Daily Telegraph understands ministers are examining plans which would see the Government directly commission small and medium-sized developers.

It would effectively make the Government one of the nation’s most significant housebuilders and break the monopoly of the biggest developers.

Ministers said that the plans would ultimately be “fiscally neutral” because the Government would recoup any investment…

Andrew Rawnsley on Why Nudge Doesn’t Work in Planning

Guardian

Experience has shown that nudge is not the miracle cure for every political challenge. Some problems are just too big to be fixed by adjusting the “choice architecture”. Britain’s housing crisis is not solvable with a few tweaks to the tax system and the planning regime. That won’t be cracked without bolder and stronger measures. Not a gentle hand on the elbow, but a muscular kick up the arse. Nudge has some proved beneficial uses for governing, but it is not the answer to everything. Some things need the push and the shove.

Revised London Plan Housing Target will Increase London Overspill to the South East to nearly 1 Million

Barely a week after we reported on the likely overspill from London we get a revised figure for the target in the revised London Plan.  66,000 per annum. Far higher than the 50,000/annum the Mayor has stated it would be in speeches and way higher than the current (higher than estimated capacity) figure of 42,000/annum.  In the last London plan examination in public the panel criticised the Mayor for arguing the shortfall would somehow magically turn up.  This time they will need a far stronger justification –  such as increasing London Density Matrix figures  by 64% (a typical overshoot these days anyway) or loss of large areas of strategic employment sites.or MOL etc. etc.

This increases our calculation of the likely London Overspill – as follows.

All of the calculations are updated to reflect the new target.

London Annual Shortfall
Target
OAN per year to 2052 Annualised Current London Plan Target Employment led (Oxford E) Revised London Plan Target Total  2016-2032 Total  2016-2052
Shortfall Completions 45,185 42,000 50,000 66,000
Typical 25,000 20,185 17,000 25,000 41,000 1,025,000 1,435,000
Typical +20% 30,000 7,185 12,000 20,000 36,000 900,000 1,260,000
Highpoint 38,000 7,185 4,000 12,000 28,000 700,000 980,000
Highpoint +20% 45,600 -415 -3,600 4,400 20,400 510,000 714,000
  • 1,260,000 dwellings = 10,500 40 Storey Tower Blocks
    Hong Kong Worlds Tallest urban agglomeration has 1,303 = up to
    7.9 Hong Kongs of Tower Blocks
    Do we want to see this Asian Style Vertical Sprawl?
  • Evidence strongly that at these densities diseconomies of congestion strongly outweigh positive urban agglomeration effects (Rappaport 2008)
  • Mayor of London – Post Grenfell – looking at alternative to tower blocks in
    Revised London Plan.
  • At 10 Storey Olympic Village Density – 335 DPH needs 1,791 Ha – 112.5 Olympic Villages, 131.8 Aylesbury Estates – 14.5 sq miles – Westminster=8.29 Sq miles
  • Much greater than All Large Scale Housing Estates in London Capable of Demolition 1,750 HA (Complete Streets/Savills for Cabinet Office 2015)
  • At Least £5 billion cost of demolition plus cost of rehousing – we know post Grenfell nowhere to decant to.
  • At Complete Streets favoured mansion block density 135 dph only capable of 1/5 this number
  • Equivalent to 18 Park Royals at Complete Streets Densities
  • So at Complete Streets densities need to knock down all of London’s Large Estates, All its Strategic Employment Sites and then start knocking down large parts of semi detached London
  • Every City that has tried development on this scale and density in recent years – e.g. Moscow, Harare, Seoul has seen mass protest, mass corruption, failure of developers after mass demolitions, overcrowding from decants and political climbdowns. Unlikely to be possible in a democracy.

If the density matrix is changed wont completions change.  Arguable and uncertain as to extent as most schemes in London are well above the density matrix standards anyway.  Detailed work is needed on the London Development Database to determine how much if any new uplift there would be.  Most likely completions will remain at between 25-45,000 units per annum they have been either side of the great recession.  The only effect therefore of raising the target will be to increase the height to which London tries to jump over and fails, exporting then the problem to the wider with east as overspill.

How to Turn Around a 20% poll deficit In 7 Weeks and Become Prime Minister – By promising to relax the Green Belt @GavinBarwell

New Zealand

Heres the plan – during the debates the incumbent Bill English was slaughtered on this issue which largely led to the massive poll turnaround.  Uk parties take note.  100,000 houses is equivalent of 1 million in the UK.  Part of the problem was though very large areas of land around Auckland have been rezoned for housing in the last 5 years completions were slow and landbanking increased.  

A promise to make tertiary education free helped as well.

Build 100,000 affordable homes across the country

Labour’s KiwiBuild programme will build 100,000 high quality, affordable homes over 10 years, with 50% of them in Auckland. Standalone houses in Auckland will cost $500,000 to $600,000, with apartments and townhouses under $500,000. Outside Auckland, houses will range from $300,000 to $500,000.

Create an Affordable Housing Authority to fast-track development in our cities

Labour will establish an Affordable Housing Authority to work with the private sector to cut through red tape and get new homes built fast. It will partner with private developers, councils and iwi to undertake major greenfields and revitalisation projects, building affordable homes with KiwiBuild and the private market. These homes will be part of great communities built around parks, shopping centres and transport links.

Growing the building workforce

Increased house-building will require a larger workforce. Labour’s Dole for Apprenticeships policy will subsidise employers to take on around 4,000 young people for on the job training in fields including building and construction. Labour’s policy of three years free post-school education will see tens of thousands more people study in all fields, including building and construction. KiwiBuild is projected to create 5,000 new jobs at its peak.

Remove barriers that are stopping Auckland growing up and out

Labour will remove the Auckland urban growth boundary and free up density controls. This will give Auckland more options to grow, as well as stopping landbankers profiteering and holding up development. New developments, both in Auckland and the rest of New Zealand, will be funded through innovative infrastructure bonds.

A 10,000 lorry park needed on top of White Cliffs of Dover in No Deal Brexit

They’ll be concrete over the white cliffs of Dover….

put in the planning application now, after all David Davis has budgeted for it, and no deal is better than bad deal is government policy.  Grant without dealy.   To hell with the AONB

Business Insider

LONDON – Crashing out of the European Union with no deal would unleash “disorganisation and chaos” on the Port of Dover, deputy chief executive of Britain’s Freight Transport Association has said.

Speaking to the Financial Times, James Hookham warned that a no-deal Brexit would leave the Dover border crossing in a state of disarray, as significantly increased customs checks would create queues of lorries reaching over 5o miles.

“If you add an average of two minutes to customs processing, you get a 17-mile queue [from Dover] almost back to Ashford,” Hookham explained to the FT. “Another four minutes takes the queue back to Maidstone, six minutes back to the M25, eight minutes and you are up to the Dartford crossing and Essex.”

Brexit Secretary David Davis and Trade Secretary Liam Fox have both this week refused to rule out Britain walking away from Brexit talks without a deal in March 2019, despite the concerns of businesses and fellow MPs.

Davis told MPs that it was “sensible” to prepare for the possibility that there is no deal at the end of Brexit negotiations, while Fox told the BBC that no-deal would “not be the Armageddon that some people project.”

A no-deal Brexit would have a number of significant implications for Britain, not least dropping out of the EU’s customs union without a replacement UK-EU customs arrangement ready to be implemented.

“Dover is set up for what you might call ‘zero friction’ and the introduction of EU customs checks could prove a real headache,” the Institute for Government’s Joe Owen told the FT.

The UK Border Force is faced with a “real headache” as the number of non-EU lorries it must check coming into Britain through Dover would rise massively if British negotiators are unable to agree on a customs arrangement.

The number of lorries needing customs checks could rise from 500 a day to 10,000, Dover worker Tim Dixon told the FT claims. “I don’t know how we — or Dover itself — could cope with an increase on that scale,”

“Catastrophic is the word I would use,” Dixon said when asked what a no-deal Brexit would mean for Dover border checks. “It puts the shivers up you. It would devastate the local community.”

Home Secretary Amber Rudd this week described a no-deal Brexit as “unthinkable” and Dover’s MP, Charlie Elphicke, has insisted that “with proper planning we cannot only be ready on day one.”

However, various businesses and trade experts are concerned that the two-year time limit on a transitional period outlined in May’s Florence speech will not provide enough time for new customs arrangements to be prepared.

“A transition period should be at least three years,” Anastassia Beliakova, head of trade policy at the British Chambers of Commerce, told the FT.

“This is important not just for businesses to prepare, but also for new IT systems to be put in place, for [HM Revenue & Customs] to hire and train new staff, for new infrastructure to be built.”

This was echoed by UK Trade Facilitation Expert Panel chair Mark Corby, who added: “It will be very tight indeed to get in place the customs systems we need by March 2021, even on the most benign scenario.

“You need three to five years, taking the transition up to 2025, to put in place the untried, streamlined systems ultimately envisaged.”

Rethinking Midlands Strategic Planning

You have heard a lot and will hear a lot concerning strategic planning for Greater Manchester, London and the Cambridge-MK-Oxford, corridor on this blog, but lets not neglect the Midlands.

In simple terms the problem.

Birmingham, the Black Country and Coventry cannot meet their needs within their boundaries.

They are seeking other nearby authorities to take this overspill.

Some areas are resisting bitterly.

Thereis of course not yet any agreed mechanism to agree the sharing of this overspill, and the institutional arrangements for LEPs, joint planning, MoUs etc. in the region are so complex and byzantine they arnt even worth explaining.  It is a good example of institutional dysfunction.

In the past age of strategic planning the focus was to study major towns spread around the region as the focus for overspill as they were the ‘most sustainable’,.  You might call this the ‘constellation’ approach. some weight in this but mispecifies the main problem.  In terms of overspill from the Black Country and Brum. say, how can development 3 miles from the edge of Stafford and from its railway station but more sustainable then say a new garden village next to Penkridge station or net to Bromsgrove Station?  In the long term we know that commuter focussed developments become much more self contained over time (take Reddich for example), but this is an argument for allocating housing in large amounts in defined locations, with their own high quality public transport systems, and large amount of employment alongside.  Developments of a scale such as Telford, Reddich or Daventry (an expansion town to a very small market town not a new town) for example.

In seems to me the Midlands needs to make the seem kind of paradigm shift we are seeing elsewhere in the country from constellation planning to corridor planning , where we plan in an integrated way innovation cluster as nodes along high frequency high capacity public transport corridors.

Seen in this way – where are the corridiors?

Of course around Birmingham they span the clockface and each will have a role, but we are missing the main chance, the main economic corridor in the country runs between the east and west midlands along the M6, the M1, the WCML and the Midlands Mainline and soon HS2.  Along this corridor has been the major jobs growth, especially in logistics and modern manufacturing.

Seen in this way the historic split between west midlands and east midlands regional planning is a mistake, an historical anachronism.  The major strategic planning problem in the area is a structural one.  Access to jobs in the ‘Trent Triangle’ is almost entirely car orientated (with the notable exception of Hams Hall).  And there are major employment clusters such as Magna Park where there are closed rail lines (more than one) adjoining.

It seems to me the Midlands needs the same kind of bold thinking on transport corridors and growth locations that Transport for the North is putting together.  The focus should be on the Trent Triangle between Brum,  Rugby/Cobentry, Leicester and Burton on Trent /Derby.   An area which is in many ways the lyncpin of England.   Here there is huge potential for joined up thinking and focused investment on very high capacity/high frequency rail services (London Overground /East West Rail style) and a few new strategic rail links- especially for railfreight.  The vast increase in WCML capacity brought on by HS2  relly unlocks the potential of this area. There is also need for bold thinking on whether a strategic road network designed to encourage junction hopping is fit for purpose.

Much of the pressure to find a solution to the Brum overspill issue will focus around Birmingham /Solihull arguments, especially around growth around the NEC with the coming of HS2 to Birmingham International.  The truth is though that the NEC area has excellent national transport connections but terrible local ones.  And growth, for example, south of the A45, could be just car oriented sprawl encouraging junction hopping along the M42.  Their is potential for growth here but it needs to be carefully though through, for example growth in a high density  transit orientated corridor between Solihul town centre, Land Rover and the NEC/Birmingham Business Park along the Damson Parkway (with dedicated lanes for a BRT), protecting the vast majority of the Green Belt within the M42 as a result.

Not to neglect the ‘Northern Gateway’ area between Crewe and Stoke on Trent, but really this is and should be considered as part of Northern Powerhouse strategic planning. Again lets not be hidebound by old regional planning divisions.

No need to Panic – Around 5.3% of Housing in the South East Needs to come from Green Belt @CPRE @ASI

Ill be publishing an analysis soon of housing needs in the quadrant NW of London running from the Greater London Edge all the way to Rugby – broadly speaking the Cambridge MK Oxford Corridor , the London Fringe in this area and the London Stansted Cambridge Corridor.

This will be the most important area for taking overspill from London and Birmingham as it is the least constrained – say compared to Kent and Sussex, and by my claculations will need to take around 50% of London’s overspill (ill explain the methodology in a forthcoming series).

The method we used shows a need for 1.5 (appox) million homes to 2052.  For the whole of Engalnd South of the Midlands the figure is closer to 5 million.  At high density assumptions (2/rds of houses being at least double current tight two storey densities) this equates to an area similar to the West Yorkshire Conurbation; dont get alarmed because of the higher densities it is actually a slowing of the rate of urbanization in the ‘when we last built mass housing’ era 1945-1979 because of the increased densities and smart growth locations. This assumption includes very generous allowances for brownfield development and uplifts of housing completions in London by 20% due to tougher pro density policies in the revised London Plan.

How much of this needs to be in the Green Belt –  16 sqkm, 5.2 sqkm already in draft local plans – for strategic sites (those over around 1,000 dwellings), you can probably double that for slight growth around tightly constrained by GB villages and small towns (that is local growth rather than strategic  growth).  32 sqkm being 5.3% of the optimum urbanisation.  This optimisation placing every single strategic site around a station or Busway/light rail /BRT corridor able to accommodate the majority of trips.

Why so low – well because

  1. so many sites  around staations are already built on by housing
  2. Around London vast areas of the Green belt is AONB, flood Plain, Common land, SSSI etc. etc.

Those (like ASI) who have estimated potential in the GB have often failed to estimate land that is unconstrained for other reasons or explain how rail and other capacity will be expanded to cope.

So why not just make it zero and drop the Green Belt altogether?

Because around some key economically important towns, Oxford, Cambridge, St Lbans, Hemel Hempsted there simply isnt much choice than to develop some Green belt sites, though even in these places the potential is limited, they need to stay walkable, cyclable, compact, transit orientated, with views of key landmarks and essential green space settings and recreation areas.

So lets not panic.  The obsession with the Green Belt (its inviolability or otherwise)  is a distraction from the real task, how and where we find sites for 5 millions new homes, mostly outside the Green belt.