Housing London: It's Time To Be Ambitious

London is to cities what Apple is to computing. The problem's we face are actually a good thing - we are simply coping with it's immense success and world admiration. We can do this - it's not a problem - everyone want to invest here. We just have to manage it so that London retains its identity, its people - because that what makes this city London.

Never more is the case for devolution in London made stronger when we learn that housing is considered only the eighth most important issue amongst British voters. A recent survey by the GLA showed that housing is London residents' principal concern. I can certainly see this - since I launched my campaign, the issue of housing has been almost exclusively the top one Londoners bring up. This along with health, education and even taxation (at the very least stamp duty) are things that London should be allowed to control.

With housing, it's vital though. The cost of an average home in London has risen to 14 times the average salary - that's double the equivalent costs in Scotland, and more than double than in Wales and Northern Ireland. With London's population expected to grow to 10 million within the next 15 years, we need to expand London by a city the size of Birmingham. Londoners are more concerned than ever with finding an affordable home. A survey by Halifax released just yesterday shows this concern - with 70% of 20-45 year olds in the UK worrying that they will never be able to buy a home, in London that figure is 82%.

This is why housing is top of my agenda. I've been meeting with everyone from the market-based Fizzy Living, to Create Streets, to the utopian idealists Generation Rent. We must come up with fair and workable solutions to London's housing problem, whilst being careful not to undermine what makes London such an attractive city in the first place.

Halving The Price of Beer

Generation Rent's big idea is to create a punitive 'cap' on rents above which money goes to a central fund, possibly for building more houses. Sounds great - 'low rents and more money for building' - who can argue with that! Unpack it a bit and Generation Rent acknowledge that the cap is a secondary concern and in fact it will rarely be collected because landlords would simply take the hint and drop rents. But although this means no extra money for building, they still see this as a win not just for tenants but for the Londoners generally because if you reduced rents in London - the price of everything would come down and we would live in a "fairer society" as land prices are, in their view, the key to all pricing. In short, to use an example they gave, halving rents in Acton would "halve the price of a pint of beer" in Bexley as the knock on effect of lower accommodation feeds through to everything.

I have to say that I got sucked into the Stalinist majesty of this utopian economic engineering. Its Director, Alex Hilton, is as persuasive as Orwell's Napoleon from Animal Farm would have been on his best ever day. Until, that is, unpack it further and pause to think of, say, the investment that would flee the country resulting no building at all. Or when we consider the negative equity that would blight our economic landscape as prices tumble and a collapse as widespread as the 'fairness' that it would eventually bring the country to it knees. Remember, if you halve the price have a beer, you halve salaries of the guys who made it, and the guy who delivered it and the person who cleans the pub and the barman who poured it for you and then the youngster who washed up after you.

At the end of the day, and millions of unemployed people later, when the dust has finally settled and you are back to exactly where you started but in a third-world sort of way - all that has happened is a general devaluation which means the ratio of salaries to rent to a pint of beer is exactly the same and all we've done taken London and flushed it down the toilet because energy costs, imports, even flights - you name it, everything outside London's control are still as expensive as ever. Bugger.

So, it's back to free markets with state help I'm afraid... This is our big challenge: we need to maintain our hospitality to investors, entrepreneurs and innovators, but avoid a 'donutification' whereby young, creative and tech-savvy residents - arguably our City's new key workers - are pushed to the outskirts. This housing problem, however, does not just threaten London's identity and charm - solving it makes good business sense. Just last week, The Economistpointed out that high house prices can force workers into moving to cheaper but less productive places. Knowledge - intensive industries such as finance and technology, which are key to London's economy, benefit immensely from workers being clustered together, as it facilitates the exchange of ideas and expertise.

Ideas Not Ideology

For too long, practical solutions have been scuppered by tribal politics and dogma. But it is worth noting that housing has, traditionally speaking, not been a particularly politicised issue. For example, it was actually the Labour Party that first pledged a Right to Buy scheme in its 1959 manifesto. Perhaps it's this that makes me smile when I'm attacked by Labour candidates for advocating a scheme that I still think is a good thing, so long as money is used to build more housing. On the other side of the spectrum, we see that free-market thinkers, such as Adam Smith and Milton Friedman, acknowledged the merits of a land value tax.

Take, for example, Singapore. It is a hub for foreign investment with a dynamic private sector- it's the only Asian country with AAA credit ratings from every credit rating agency. At the same time, over 80% of the population lives in accommodation developed and heavily regulated by the government. This is not to say that we should adopt a similar policy in London, rather it's to demonstrate that we need to move beyond these sharp political differences and acknowledge that we can incorporate ideas from both sides of the political spectrum. No political idea simply belongs to a political party.

This can be brought about by both taxing intelligently and cutting red tape.

As Mayor, I would like to see changes to planning permission. A fortnight ago, I wrote in The Independent about abandoning Section 106 altogether and replacing it with a Community Levy, which would allow councils, or even the Mayor, to make more accurate long-term strategic decisions about housing, as well as improving efficiency.

But we can do more. When a Londoner wants to expand their home or create something new, the presumption should be 'yes' rather than 'no' - currently, only 32% of planning applications are successful. London's planning regulations were designed with a 19th century city in mind, and these archaic regulations are stifling development.

The Mayor's Fund should not only be accessible to smaller developers but also to existing home owners, allowing them to make a greater investment in their properties. For instance, I would like to see more Londoners building upwards. If at all possible, we should feel obliged to go up a floor; there is a maximum height for a building, but no minimum height! I will push for a change in planning regulations to make it easier for homeowners to add a floor or two without being burdened by red tape and hurdles, as we must recognise the value of small, local improvements as well as backing large-scale projects.

It's Time To Be Ambitious

We should be ambitious, too. The task of building between 40,000-70,000 homes per year, depending on who you listen to, seems vast; but it would require only 1.25% of owner occupiers to add another unit to their home.

On my Mayoral journey thus far, I've uncovered a real desire by developers to provide long-term affordable rental accommodation, and it's becoming increasingly clear that just a few tweaks to our existing legislation will enable masses of home building. I will be working with developers and government to overturn the rules that prevent them from providing affordable housing and extending some of the tax breaks that housing associations receive to facilitate this. Watch this space - that's next week's blog.

We must be up for this challenge, not just spite our city for the sake of political dogma. It's not like London's never anything before, our city space is almost unrecognisable to that of 20 years ago. The cost of being the most successful city in the world, is that people want to live here. It's why with every complaint I hear about the gentrification of Shoreditch, I have to remember that places like Hoxton with an ugly past of white supremacism, the place you went to buy a gun from a pub, and Dalston, where I lived before it was trendy, where you literally you took your life in your hands every time you went out after dark - are infinitely better and hugely desirable. People often talk of the 'good old days', they often hark back to a time that never existed. We must look to today and the future - building a London for the people that live here, as well as those that want to.

London is to cities what Apple is to computing. The problem's we face are actually a good thing - we are simply coping with it's immense success and world admiration. We can do this - it's not a problem - everyone want to invest here. We just have to manage it so that London retains its identity, its people - because that what makes this city London.

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