Naomi Newstead works in the housing and development industry, is a former GLA candidate, and contested Camberwell and Peckham in this year’s General Election.
“If you are so concerned about housing, Naomi, you should support our Mansion Tax” – or words to that effect. Harriet Harman and I were debating at a hustings just before May’s election, and housing was the main issue at every one we participated in – the concern being of course that housing for sale in London is completely unaffordable to most working Londoners.
Labour’s approach is to take it all out on existing homeowners, forcing them to pay more to the state just to own a home that has reached a certain value, and impose restrictions on what they can earn as a landlord. This completely fails to address the supply issue, and is simply an attack on homeowners.
In fact, one of the main problems is that when councils do have an opportunity to negotiate the supply of reasonably priced housing they frequently fail to do so, and seem to become overawed when presented with developers’ viability assessments.
In a robust housing market, where investors can make serious money, there is no justification for London boroughs to lie prostrate and helpless in the path of housing developers. Yes, the developers finance and build the homes, but they make a return for doing so. They can also take a fee for project management. On larger schemes, their risk is reduced through taxpayer subsidy on the affordable element.
A better outcome would be a relationship between public sector landowners and planning authorities that gives security to the developers and investors, but in which government drives a harder bargain.
We could and should stop the centre of London being turned into a glorified pension pot for Far East investors, where homes are built to cater for the foreign market and bear no relation to the urban grain of London and then lie empty, sapping the vitality and economic viability out of central London and laying waste to parts of our city that have existed since medieval times. This process creates a rippling-out across London of price escalation to the point at which a home anywhere within reasonable commuting distance becomes unaffordable for most people.
One obvious measure for London boroughs when selling land for development, as many frequently do through estate regeneration, would be to structure the development agreement to prevent developers from selling on a block of properties abroad.
Where local authorities don’t have the power to do this in cases in which the land is owned privately, the planning system can still be used to refuse developments that don’t deliver. Councils should be insisting on homes where price relates to income – which would still allow for a thriving luxury homes market, but not at the expense of other price points in the market. This would not require excessive intervention but a robust analysis of the viability assessment.
In terms of the rental market, private rental accommodation is dominated by private landlords, and inevitably, as demand outstrips supply, people are paying higher prices for uncertain tenancies and variable standards. Therefore in government we should encourage the institutional investors to finance long-term rental homes. If we initiated this on surplus public land, the government could provide the security needed to reduce the risk of investing in this model of housing.
Finally, it is a good idea to extend the principle of right to buy to housing association tenants. The policy is the most immediate way of helping people on low incomes to own property in London. The housing associations receive significant levels of public money. £1.2 billion was awarded in the recent allocations for London up to 2018. Therefore disposing of a fraction of their assets is reasonable as they are not wholly reliant on borrowing based on capital to finance the building of homes.