23 Apr 2012
New ideas to fix London’s housing
Much celebration here at Shelter HQ, as both Ken Livingstone and Boris Johnson have now backed our Mayoral election campaign and pledged to create Homes for London.
As the race enters its last week it is clearly a Ken-Boris contest, so it’s easy to ignore the other candidates, which is a shame, as they have done a lot to finally get housing onto the agenda. Both the Greens’ Jenny Jones and the Lib Dems’ Brian Paddick have backed Homes for London – as has independent Siobhan Benita. Today Benita has called for a new, regulated market in fixed price homes for sale, built on public land.
I have my doubts as to whether the Mayor’s land holdings really are the panacea that all sides like to claim – a bit like ‘efficiency savings’, public land always comes up at election times, because it seems to offer quick solutions without spending any money. Needless to say, it rarely delivers, for the usual boring and complicated reasons (it’s often in the wrong place, or needs expensive cleaning up, and public sector landowners need to make a return too) – so it’s still there to be trumpeted as the miracle solution at the next election.
But Benita’s proposal has a lot going for it – especially compared to existing ‘low cost homeownership’ options, such as NewBuy. They have yet to succeed in filling the chasm between ordinary people’s earnings and house prices, leaving some 900,000 ‘forgotten households’ unable to get a social home or afford even the cheapest ‘low-cost homeownership’ products. Purchasers are expected to ‘staircase out’ to full ownership eventually – which is nice for them, but reduces the stock of affordable homes available, and so supports the steady push of affordable homes out of the expensive areas where they are needed most.
Far simpler, and potentially more genuinely affordable, would be to offer homes for sale at discounted prices, but without the staircasing option. When the occupants come to sell, the homes would still be available at below market price, so the initial subsidy is preserved in that home.
The resale price would be determined according to the market and the amount of subsidy received: if you bought a home at 75% of the market value, you would sell it for 75% too. Over time, a permanent sub-market sector would grow, providing a clear and credible alternative option for some of those squeezed out by our absurdly polarised housing system.
I’ve long wondered why no-one promotes this sort of simple intermediate homeownership option in this country. In America, Community Land Trusts prioritise this type of tenure, and people seem to understand and appreciate it more than our overly complicated products.
This wouldn’t get round the need for subsidy in the first place – I hate to break to you, but there is no alchemy that will deliver affordable housing at no cost – but it would at least ensure that public subsidy in the form of cheap land would stay where it was needed.