London’s first-time homebuyers have struggled to make ends meet for years as they take the first step towards what has always been seen as an inalienable right for the British – to own their own home.
The cost-of-living crisis is now hitting millions of people hard as they absorb soaring energy bills and begin to rein in non-essential spending to cope.
According to ONS data, house prices in England rose 14% in 2021, while average earnings fell nearly 1%. This is frustrating for first-time buyers, as they race to save for a deposit only to find the amount they have amassed is outpaced by the growing size of deposit needed.
At the same time, the government seems to have axed planning reforms that would have seen land zoned according to its need, with some protected land and some earmarked for growth.
Trust has also eroded between councils and developers on viability. Councils are suspicious of what they see as manipulated numbers and housebuilders are frustrated by what they see as unbridgeable planning conditions. Meanwhile, annual housing starts in London fell 40% between 2015 and 2021.
Renting in the capital isn’t necessarily the answer, with so many new build-to-rent schemes planned at the premium level where rising energy bills make lifestyle-driven additions to rents look not so appealing after all.
So how can we help the housing market and first-time buyers? First, the Greater London Authority should designate all new homes either open market, social housing (with a 40%-plus market discount) or affordable. Open-market housing would be built by the private sector, social housing by the public sector and via S106 development taxes and affordable housing mainly by public-private partnerships.
Next, we should ask if there is a better way to navigate the viability challenges that squeeze out affordable homes. Could we operate on a tariff-based system, designed on a subregional or zonal basis, linking prescriptive outcomes for affordable housing directly to land value? The land market would have to adapt, but it would take the viability debate from a micro level to the macro, increase transparency and engender trust between the public and private sector.
We also need a radical rethink of how smaller sites are delivered and how small and medium-sized developers and housebuilders are treated.
I sense deep disquiet from levelling-up and housing secretary Michael Gove about how Britain’s new homes landscape is run. In that case, make it easier for smaller developers to deliver sites the big boys avoid by loosening planning restrictions, easing the Community Infrastructure Levy and making Help to Buy only apply to sites below a certain size with an above average quantity of affordable housing.
And finally, welcome Ukrainian refugees with open arms. You may think this contradicts all of the above as it will fuel housing demand. But playing our part in solving this humanitarian crisis would reinforce Britain’s reputation as a great nation admired around the world – and concentrate the minds of politicians on the crucial need to fix our broken housing market.
Marc Vlessing is chief executive officer of Pocket Living