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The London housing challenge

It is undeniable that London is facing a housing crisis, and with a requirement for an additional 49,000 homes a year to be built this is an issue which has reached the top of the political agenda. 

The government has identified owner occupation as a priority and numerous schemes have been launched to help make this a reality, but in a city where there is such a gap between income and current house prices, is this the right solution for London? 

At our recent 'London Housing Challenge Seminar' TLT's Linda Convery was joined by GLA's David Lunts, Jennie Daly from Taylor Wimpey, Adrian Bailey from Knight Frank, Simon French from Panmure Gordon to discuss how this crisis can be addressed. 

In this article we highlight some of the key themes which were raised at the seminar. 


Well thought out regeneration schemes can play an important role in transforming less popular areas and offering housing in areas outside central London. The re-development of existing housing estates could also play an essential part in solving the housing crisis. 

Increasing build rates

Building more homes seems to be the obvious solution, but in reality the high level of build required is not something which has been achieved since the 30s, 40s or 50s when the visibility of the housing crisis was more in the public eye. Instead we need to look at what can be done to increase build rates and how the market can be stimulated to meet the demand. 

The public sector’s role

The public sector and local authorities in particular are going to play a key role in helping to solve the housing crisis, but in order to achieve this goal a new strategy needs to be adopted by local authorities. A strategy which:

  • focuses on championing investment in the housing sector;
  • drives forward regeneration schemes which include a substantial housing element; 
  • improves transport and infrastructure so that outer lying areas can be developed as housing zones; and
  • encourages land acquisition and the utilisation of compulsory purchase powers to help develop schemes. 

In order for this strategy to be realised, and for local authorities, developers and the construction industry to come together to drive forward house building, there are four key issues which need to be addressed:

Where are we going to build these new houses? 

Whilst a number of local authorities may be sitting on land reserves, more needs to be done to improve resource within planning departments. Up to date development plans will reduce inflated land prices and release land in a timely manner.

It is also important to realise that, particularly in central London, the land which is available for development is scattered over a wide area. Land assembly is often very complex and the cost of development may outweigh the returns. 

If land in central London is not available one solution is to build properties outside of the traditional city zones. For this to be viable improved transport and infrastructure needs to be put in place. High speed railway links such as HS2 could expand the commuter zone and allow people to live further away from their place of work. 

Another consideration is to look at the green belt, and for many this is a very controversial issue. Is it time to reset green belt boundaries to allow cites to expand their outer limits? 

How do we address planning issues?

There is often a perceived disconnect between the developers and the local authority planning departments. From the developer side there is sometimes a feeling that it is difficult to communicate with the planning departments and that the planning system is inefficient.

Local authorities will need to work with developers to change this perception and ensure that their planning policies are focused on increasing growth. 

It is important to remember that large sites don't get built-out very quickly. They are normally subject to phased development as the absorption rate of the market limits the rate of development. Both developers and local authorities need to consider what can be done to increase build-rates. 

Can the house building industry meet the challenge?

There is a fundamental issue with the number of houses which can realistically be built. The house building industry has changed since the housing booms of the 30s, 40s and 50s and it is not geared up to produce the level of housing required. In addition there is a lack of market confidence and large sites are often being 'held' due to uncertainty. 

Without government intervention to help encourage change and nurture the house building industry it is unlikely that productivity will increase to the levels required any time soon. 

Investors in the private rented sector are being hit by rent price caps, increased stamp duty etc, but ignoring the private rented sector could be considered short sighted. The private rented market could help underpin the future of the market and give house building companies the confidence needed to un-block potential developments. 

The focus is very much on building new houses but it is important to consider the role of development and redeployment of existing stock in helping to alleviate demand. 

Who are the buyers?

With house prices in London triple the UK average and the gap between income and house prices continuing to grow, the onus here is on the government to do more to provide financial incentives for buyers. 

There is a concern that the government's position on home ownership is in fact contributing to the crisis. There is a raft of home ownership products which are open to almost anyone with very little criteria for qualification. It may be that this is creating an inflated perception of demand, making it very difficult to rationalise the market.

Whilst building more homes and improving transportation to increase the catchment area of London will go some way to solving the problem, it is also worth considering whether businesses should move away from London and be encouraged to invest in other cities. This would not only ease pressure on London but also help to drive up GDP in less developed areas of the UK.

It could be argued that one solution would be to move key government functions out of London as this would free up a huge amount of land and resources. Whilst this would certainly change the face of London, how realistic is this in practice? Would London be damaged by the loss of tourist revenue? 

It would seem that there is no easy solution to the London housing crisis and only by local authorities, developers and house building companies working together will any headway be made. 

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at December 2015. Specific advice should be sought for specific cases. For more information see our terms & conditions on www.TLTsolicitors.com

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