The scale of London’s housing crisis is well known.
Our capital city needs to build approximately 50,000 homes a year but is currently delivering around 25,000, which presents an enormous challenge.
Grosvenor has weathered many storms in its 300-plus-year history but, like many firms with a significant London presence, we are particularly concerned about the current housing shortage. It threatens London’s continued economic growth, which is fundamentally dependent on attracting and retaining talented young people.
The chancellor of the exchequer rightly gave housing a high priority in the spending review. There were material steps forward including increased funding for affordable housing (in particular, starter homes and shared ownership) and greater determination to free up public land for development.
It is important to keep firmly in mind that the housing crisis is caused by the shortage of supply and that policymakers need to do everything possible to drive an increased output.
I have increasingly come to the view that the solution requires all types of new supply and all providers to grow capacity simultaneously. This means housing for sale (including starter homes), shared ownership, market rental housing and housing at discounted rents. And it means all providers: traditional housebuilders, housing associations, developers, build-for-rent investors, other institutional funders and local authorities.
An increase in supply depends on land availability and a policy environment that encourages investment. The next London mayor will play an important role in this. Londoners would benefit from the Greater London Authority (GLA) deploying all the powers at its disposal to get housing supply moving.
This must include bringing all publicly owned land that is surplus to requirements to the market. But that may not be enough. The GLA and boroughs could play a more proactive role through site assembly, enabling infrastructure, a clear and unambiguous planning, design and tenure framework and, for large sites, making available smaller serviced plots that could be developed simultaneously. A muscular mayoral agency, working with local communities and boroughs and using its full range of powers, could have a very positive impact.
In London, the housing shortage has, sadly, resulted in polarised outcomes. Private homes are being bought and sold by the few who can afford them. People with the greatest need have access to affordable rental properties. But what about the majority on low and middle incomes?
Starter homes and shared ownership are not the only answer, especially in London. Rental homes on long-term, secure leases could also play an important part. A quarter of Londoners rent privately. This is an important segment of the market that needs to grow and policy should encourage this. There is, according to the British Property Federation, £30bn of private capital looking to invest in rental housing. This should be exploited. If sufficient land is made available for development, build-to-rent projects can provide net additional supply. In policy terms, there is no need to make a choice between promoting housing for sale or for rent. They are not mutually exclusive. We should promote both if we wish to tackle the core problem of a supply-side shortfall.
There is no single solution to the housing crisis. It is multifaceted and complex. We need to turn all the taps on full, simultaneously, to have a chance of building the homes needed to keep London competitive.
Peter Vernon is CEO of Grosvenor Britain & Ireland