Londoners Celebrate Rent Affordability Remainder of Year - Residents rejoice across capital as rent expenses are covered for remaining period.
In London, the annual milestone of Average Renter Work Days has arrived, illustrating the gravity of the city's housing predicament. This year, it falls on May 27th, signifying that the typical London tenant will have labored for a staggering 146 days to meet their annual rent payments—leaving them to start earning for themselves post this date.
London's housing crisis unfolds in a landscape marked by nimbyism, a phenomenon that even surpasses UK standards. The obstacles confronting construction initiatives, be it a row of townhouses or an apartment block, make it a formidable challenge akin to Sisyphus pushing his boulder uphill. This in turn forces the average London tenant to work three weeks longer than the national average simply to secure a dwelling.
The capital's predicament is showing dire signs of worsening. Despite its pivotal role as the economic nerve center of the UK, London is constructing fewer homes rather than more. Seven in ten boroughs haven't initiated building a single new home this year, an alarming fact as development in other regions begins to pick up speed.
One underlying factor contributing to the housing shortage is the Building Safety Act 2022, a legislation meant to address the Grenfell tragedy. Under this act, any building with over seven stories or more than one residential unit must acquire approval from the Building Safety Regulator. However, the regulator is only managing to sign off on 14% of applications, a bureaucratic roadblock that particularly stifles development in densely built areas like London, where developers must expand upward rather than outward.
Local politicians cannot dodge their share of responsibility in this matter. Over the years, they have catered to nimby sentiments, resisting plans ranging from Heathrow expansion to affordable housing. Sadiq Khan, the new Mayor, resembles his predecessor in his tendency to resist development, having declared the green belt as a "sacred" entity in 2016. In contradiction to adoption of supply-side rationality, Khan has repeatedly questioned the merits of individual landlords, laying blame on them for decades of inadequate housing construction.
However, there are glimmers of hope in this exasperating scenario. In recent times, Khan has begun to acknowledge that the lack of housing supply is fueling skyrocketing rents. In a positive stride, the Mayor has pledged to construct 25,000 affordable homes in the period of 2024-25 and has also expressed support for development on the green belt.
Unlocking development in London is a Herculean task nonetheless. Despite an infusion of £4bn in central government funding, the number of affordable homes built in the capital has plummeted by 66% over the past two years. To alleviate London's rental costs, innovative approaches like reinstate Urban Development Corporations are suggested. Such corporations, state-backed entities responsible for the transformation of derelict areas, could play a transformative role if brought back into the equation. By circumventing existing regulations and attracting private money, a Thames Gateway UDC could potentially unlock 163,000 new homes, accounting for over 10% of Labour's 1.5m national target. Eliminating restrictions on land within a 10-minute walk from a railway station would enable the development of an additional 1 million homes within the green belt surrounding London.
Without the constraints imposed by the threat of re-election, current Mayor Sadiq Khan has an opportunity to leave a lasting legacy. By embarking on development projects in collaboration with the friendly government, Khan can implement creative solutions to the housing crisis and drive down rents for everyday Londoners.
Sebastian Charleton serves as the digital and communications manager at the Adam Smith Institute.
The housing crisis in London, entrenched in a landscape of nimbyism, intertwines with the city's politics, prompting general news headlines. Despite London being the economic nerve center of the UK, it's constructing fewer homes, against the backdrop of the Building Safety Act 2022, policy-and-legislation that hinders development, particularly in densely built areas like London. Efforts to alleviate this crisis require innovative approaches, like reinstating Urban Development Corporations to drive down rental costs.
