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Dick Sorabji: Housing is a global city challenge – not a London one

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London’s biggest challenge is to build enough homes and make them genuinely affordable for Londoners. The task is huge and complex, so there may be some comfort knowing that it is a shared endeavour with cities across the world.

The UK capital is building more, but is still far away from the 64,000 homes per year needed to keep up with city growth of nearly 10,000 new Londoners each month. It is not just London facing this: Manchester was recently named one of Europe’s fastest growing cities. Population growth and housing affordability challenge many of Britain’s great cities.

Winning consent to use land in cities is hard. Land can be too expensive to prepare, or too contentious to use. London boroughs have delivered a pipeline of 270,000 planning permissions, but our industry business model does not convert these into homes.

The British funding model for affordable housing relies on requiring developers to add affordable homes to their private developments. In London the mayor has set an ambitious 50% target for affordable housing and produced a 35% threshold for testing new schemes. All UK cities use this approach and must balance the risks of choking off home building against building only expensive homes.

These dilemmas now affect all world cities. The Paris banlieue stands as a warning against building cheap homes all together in one wrong place.

Likewise, San Francisco has more rough sleepers than the whole of England. Its planning laws and politics have kept densities low, and choked off new land for building. Instead of paying to subsidise affordable homes it has relied on rent controls which turn out to further constrict supply.

Seattle tried to balance the demands of nimby voters and public housing campaigners through developer deals on the UK model. With this the city achieved 5-11% affordable housing. Using the US’s greater city fiscal freedoms they tried a payroll tax to subsidise homes only to see Amazon threaten to move its staff elsewhere.

As shown, this is a global issue. Since the financial crisis housing costs have risen faster in cities than nations. Globally fixing the affordable housing shortfall would now cost $650bn, or 1% of global GDP.

The economics of the fourth industrial revolution based on advanced computing brings new business to cities and people follow. But this change has not brought builders nor the politics needed to deliver enough new homes.

Like other global cities, London must do far more to find enough land, win consent to build on it at a reasonable price, build faster and fund affordability. Yet looking around the world’s cities it is worth bearing in mind that the British approach is one of the better foundations upon which to build.

Dick Sorabji, corporate director for public policy and affairs, London Councils

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