Solving London’s housing crisis

London’s housing crisis is only getting worse, but the upcoming general and mayoral elections create an opportunity for the parties to implement new ideas and change course.

The cost of housing is much higher in London than elsewhere in the UK. So high that millions are left in poverty after they have paid their rent or mortgage, and still more once they have paid energy bills, or high commuting costs because they can’t afford to live near work. After considering how much people pay for housing, London has one of the highest rates of poverty in the UK’s regions.

Many live in homes that are cold, damp, unsafe, or overcrowded – and this worsens their physical and mental health while harming London’s transition to net-zero carbon emissions. Most private renters have very little security, and risk having to find a new home with little or no notice. This makes it hard for them to build a community where they live, and to get the best from schools and healthcare. There are over 300,000 households on the waiting list for social housing in London.

London has more households in temporary accommodation than the rest of England combined, while the number of people sleeping rough in London has increased by nearly 50 percent in the last decade. And the problem is getting worse. In 1997 the average house in London cost the equivalent of about four years’ salary: in 2022, it had risen to 12 years’ salary, peeling away from the rest of the UK. Our previous report, on London’s Homes Today, sets out these issues in more detail.

This is not a hypothetical possibility. San Francisco, in California, has one of the most acute housing shortages of any city on Earth, with average rents at more than $3,100 (£2,500) a month, caused by extremely restricted supply and high local wages. As a result, homelessness has spiked, with 38,000 people without shelter on any given night in the Bay Area. Since early 2020, the city has seen the largest net outflow of residents of any US metropolitan area.

London has systematically underbuilt new homes for decades, creating a backlog of people who need homes, in both the market and social sectors. With high demand for housing and supply that doesn’t always respond to rising prices, house prices in London are very high compared to other parts of the country, increasing housing costs and forcing many residents into overcrowded homes.

Living in the right home brings huge benefits. These go beyond the individuals who live in any particular house or flat. Too often we treat housing policy, and housing decisions, as being about consumer choices – and we miss the wider economic and social benefits that good, affordable homes can bring. Instead, we prefer to think about homes as infrastructure, like the electricity grid or railway network, rather than individual units.

That is why this report calls for a long-term approach to housing policy and investment, with longer time frames for funding and decision-making. We think that everyone in London should have access to affordable, safe, and good-quality homes, that provide stability and offer access to essential amenities.

To build enough homes in London, we need to double annual housebuilding from the 37,000 homes built in 2021/22 to approximately 74,000 a year for 15 years.6 We think this will require a large expansion of the grant available to build affordable homes and accept new, sustainable development on low quality areas of Green Belt land. One estimate found that using less than 2 percent of England’s Green Belt land could deliver between 1.7 and 2.1 million new homes while creating thousands of hectares of new public green space.

Also Read: The UK’s Housing Crisis