|The Mayor expects 80% of new housing to be in these 33 regeneration areas|
The Willesden Green apartments are being advertised in Singapore with the selling point that they have no affordable housing or key workers on site. Yesterday it was revealed that flats in Stratford are being adverised in a similar way.
Darren Johnson writes:
After looking at a series of case studies and examination of the evidence Johnson concludes:It is much easier for the big developers behind these projects to get the finance from banks if they can sell lots of housing off-plan (before it is built). Investor landlords are quite happy to buy off-plan and have little difficulty in securing the cash or mortgage.By putting the money in up front they have, in the Mayor’s words,“helped bring forward housing development”. The Mayor estimates that one third of all buyers of new homes are from overseas, and that two thirds of all new homes are sold to investors.Whether it is a Londoner looking for a buy-to-let investment,a pension fund investing in new private rented housing,or an overseas investor exploiting the exchange rates, the Mayor is a champion of anything that gets housing built.
National government policy has put local councillors, planning officers and residents in a difficult spot. They are constrained by a free market dogma that says we just need developers to build more homes, and that ignores the potential for other approaches.
The law of supply and demand works with things we consume. If the price of TVs is high, produce more TVs to meet demand and prices will fall. But private developers are very unlikely to meet the demand for housing. If the supply of TVs doesn’t increase and prices stay high then demand should fall off.
But when house prices rise people see an opportunity to make money so demand can keep rising, especially if investors from around the world join the feast.
The Government is encouraging buy-to-let mortgages with tax breaks; helping people take out unaffordable mortgages with Help to Buy; encouraging overseas investors to buy new homes off plan.
The Mayor supports these policies because he says they increase supply, but of course they are also increasing demand.In fact, they are probably more successful at increasing demand than they are at increasing supply, so they are actually making the problem worse.
Councils and residents can’t do very much about this.
But the Mayor of London is in a unique position to advocate bold changes to housing policy. He has recently argued that stamp duty revenue in London should be devolved to City Hall, giving him a large budget for affordable housing.
He could go further and call for a housing policy that:
1. constrains demand by putting controls or extra taxes on overseas investors and second home owners, or by putting a tax on all land values to dampen speculation and stop developers sitting on large, unused land banks
2. gives councils, housing associations and co-operatives the money and powers to build affordable homes that stay affordable forever whatever the market is doing, instead of expecting the private market to build them
3. puts ordinary people in a better position to weather the crisis while it is tackled, for example with continental-style stabilising rent controls and protections for private tenants, ideas backed by the majority of the Assembly in its own reviews of housing and its majority support for the Let Down campaign
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