15 Truths About London’s Housing Crisis

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ASH Presentation to the Architectural League of New York (Part One)

London is experiencing a housing crisis, unprecedented in its severity, whose solution demands taking tough decisions. An already densely populated island is predicted to see a major increase in population, and nowhere more so than in its capital. An influx of migrants and refugees will push Greater London’s population up from its current peak of 8.6 million to approaching 10 million by 2020. Land in London is scarce and correspondingly some of the most expensive in the world. The building industry is ready to take up the challenge and build the homes that Londoners need. But they need land.

Although large in expanse, London housing is low in density. Following the population decline in the 1950s and 60s, poorly designed Brutalist council estates were hastily erected across the city, replacing London’s traditional terraces with high-rise but low-density tower blocks. However, intrinsic design flaws and poor build standards have inevitably given rise to crime, anti-social behaviour, drug culture and even rioting.

But there is a solution. Independent think-tanks have all arrived at the same conclusion: that here, on these sink estates, lies the brownfield land developers need to meet London’s housing demands. In place of housing estates come to the end of their life span we need to build new ‘city villages’. In place of high-rise and low-density we need to build medium-rise high-density on London’s traditional street plan. In place of hastily erected, pre-fabricated concrete blocks we need to build high-quality, low-energy homes that will last for generations.

Under central government cuts necessitated by a program of fiscal austerity, local authorities are working to get the best deal for existing residents, while at the same time building the homes that that will enable a new generation of Londoners to get onto the city’s property ladder. In close consultation with estate communities, the architectural profession is already designing homes to the highest standard. And the architectural press, vigilant to the ethical dimension of the profession, is reporting on London’s transition to a fairer, more inclusive, less segregated, more multicultural city of mixed communities, while celebrating the emergence of a new London vernacular in architecture.

According to the National Centre for Social Research, 86 per cent of the British population wants to own their own home. To this end, the Government has promised a multi-billion pound investment programme to build a proportion of affordable housing on every new development; and the London Mayor has committed to building 50,000 new homes a year for the next five years, doubling the current rate of completion. Backed by the foreign investment a post-Brexit UK needs to be competitive, the private sector will create the new communities London needs to thrive in the Twenty-first Century. By cutting through the red tape of bureaucratic planning requirements, the Government’s Housing and Planning Act is the first step towards this vision of a new London. In this historic undertaking, the architectural profession is ready to take a leading role.

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This – more or less – is the narrative to which every politician, councillor, consultant, builder, property developer, housing association, real estate agent, academic, journalist and architect in London has subscribed and repeats pretty much verbatim and certainly ad infinitum. The truth, however, is something very different. Here are fifteen truths about London’s so-called housing crisis.

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1. London is experiencing a boom in the housing market. According to figures released last month, London house prices have risen 86 per cent since 2009. In May of this year, the average price of a home in Greater London passed £600,000 (about $760,000), and is currently over £970,000 ($1,230,000) in Inner London. The housing crisis in London is not one of supply but of affordability, with 56 per cent of homes failing to meet this criterion in the new Living Home Standard.

FACTS. In the two years up to December 2015 property wealth in the UK increased by nearly £400 billion, more than twice the GDP of Finland, and now constitutes an economy in itself. During this time, the wealth of the richest 10 per cent of UK households increased by 21 per cent by doing little more than owning their own homes.

2. The UK is anything but crowded. Twice as much land, nearly 2 per cent of England, is given over to golf courses than to housing. 10 per cent of England’s land is classified as urban, with most of that taken up by gardens, parks, roads and lakes. Just 2.27 per cent of that land is built upon, and only 1.1 per cent is used for homes. As for all those foreigners coming over and stealing our homes, the entire UK accepted a net migration of just 333,000 in 2015, well short of the predicted population increase in London alone.

FACTS. During the worse refugee crisis in Europe since the Second World War, the UK granted asylum status to just 13,905 people in 2015, with the promise to accept another 20,000 Syrian refugees by 2020.

3. At the end of 2015, the top nine house builders in the UK were sitting on land sufficient to build 600,000 new homes. Land, not materials or labour, determines the value of real estate, and the less there is of it the more it costs. London, consequently, has some of the most expensive land prices of any major city in the world – more expensive than New York, comparable to Singapore and Hong Kong – and therefore the most expensive house prices in the world.

FACTS. The Berkeley Group, which owns land for 43,200 homes, built a mere 3,350 properties in the UK in 2016, yet its profit margins are the highest of any builder in Britain, rising from 27 per cent in 2010 to 34 per cent in 2015. The pre-tax profits of Barratt Homes, currently sitting on land for 142,100 homes, rose from £42.7 million in 2011 to £565 million this year; those of Persimmon Homes, sitting on land for 92,400 homes, rose from £144 million to £638 million.

4. While Inner London doesn’t have the population densities of the overcrowded slums of its pre-war peak, the areas the developers have their claws into – the traditionally working-class boroughs of Islington, Tower Hamlets, Hackney and Lambeth – are the most densely populated in London. What identifies the Inner London boroughs chosen for ‘densification’ is not their insufficiency of population, but their plenitude of council estates.

FACTS. Islington has a population density of 14,735 residents per km², the highest in London; Tower Hamlets has 14,201, Hackney 13,850, and Lambeth 11,358. Only the Royal Borough of Kensington and Chelsea comes between them with 13,016 residents per km². The City of Westminster, at the very centre of London, has a far lower population density (11,109 residents per km²) than these boroughs, and is only slightly higher than that of Camden (10,675) and Southwark (10,432). Westminster, moreover, has 11,457 properties registered to off-shore companies, and therefore presumably standing empty. Yet we don’t hear calls for them to be bought by compulsory purchase order and demolished to make way for new housing at greater densities. Both these boroughs are, of course, the only Inner London boroughs run by a Conservative Council.

5. Because of this, a concerted campaign has been waged against the design and build of council estates and the communities they house as broken, come to the end of their life, as architecturally flawed, a socialist dream turned nightmare, as full of immigrants and benefit scroungers, as valueless and vacant voids from which wealth can and should be extracted. In reality, crime rates on council estates are consistently lower than in the surrounding area, and their managed decline is easily reversible with the maintenance that has been withheld for decades. But to prepare the British public for the land grab that is driving the demolition of our estates, this image of the 5 million homes in which 17 per cent of UK households still live is propagated and repeated in every news report, reality TV show, government announcement, mayoral manifesto, council meeting, builder’s publication, developer’s conference and architectural presentation.

6. And where the press has led, the think tanks have followed – not in independent pursuit of solutions to the housing crisis, but under the patronage of the public and private bodies that have most to gain from it. London’s housing policy is being written by a real estate firm, think tanks are funded by housing associations, academic reports commissioned by building companies, government housing commissions chaired by property developers. It is hardly surprising, then, that all are agreed on a common aim, from which their sponsors, funders and backers will make the greatest financial profit and political capital.

FACTS. Peabody housing association, which owns and manages around 27,000 homes in London, funded and helped write the Institute for Public Policy Research report ‘City Villages’, to which politicians of all political stripes regularly refer when repeating the discourse of London’s housing crisis. The Berkeley Group recently commissioned the London School of Economics to write another supposedly independent report arguing why it, and not our local authorities, should be tasked with building not just our homes but our communities. The London Housing Commission, which was set up by the IPPR, is chaired by the Chairman of Peabody and sponsored by real estate firm Savills, whose report, ‘Completing London’s Streets’, is the source of the Mayor’s housing policy. And Policy Exchange, another so-called independent think-tank, whose report ‘Create Streets’ has had a huge influence on identifying the objectives of The London Plan, is funded and supported by the Conservative Party.

7. In place of the demolished estates, high-quality, high-value housing is universally recommended as the answer to London’s housing crisis, replacing the only homes to have escaped the city’s rocketing rental prices with financial assets for non-domicile real estate investors, buy-to-let landlords and property speculators. The more council homes are demolished, the more luxury apartments get built, and the worse the housing crisis gets. This leads to louder calls to build more high-value housing, resulting in more social housing being destroyed. And so it goes, like a dog chasing its own tail. And far from being high quality, the new builds are often of shoddy standard. To take one example, a block of flats built by Wandle Housing, a housing association supported by the London Mayor, is being pulled down after only six years due to water damage. And under private building companies, space standards have gone out the window.

8. While local authorities have suffered huge cuts to their budgets by Central Government, this in no way justifies the estate demolition programme being pursued by London councils. The refurbishment and infill of existing estates, which can increase their housing capacity by up to 50 per cent, has consistently been shown to cost a fraction of their demolition and redevelopment. The motivation behind estate demolition is not the re-housing of more Londoners at higher densities in better homes, but the enormous profits to be gained from building high-value real estate on sought-after land. The resulting demographic shift is driving London further and further towards a Parisian model of the city, with a centre for the international rich surrounded by a suburban ring of service industry workers drawn from a largely migrant population. And we saw in 2016 how that social contract is working out.

9. Far from being consulted, estate communities are fed disinformation, made false promises and lied to. From the moment they are informed their estate is being considered for ‘regeneration’, to the moment the decision to demolish their homes is publically declared to be the only financially viable option, they are repeatedly told that nothing has been decided. In fact, the decision to demolish an estate is made long before the so-called consultation with its residents begins. Those who subsequently offer resistance are branded as troublemakers, banned from council meetings, removed from engagement panels, and even threatened with the law; and the architectural and financial alternatives they offer to the demolition of their homes are dismissed out of hand by local authorities, many of whom are hand in glove with the building industry.

10. If the architectural press is vigilant, it is not to the ethical dimension of the profession, but rather to the shrinking of the remit of architects to little more than technicians. Whether debating the ethics of building a sports stadium in Qatar or demolishing a council estate in London, article after editorial informs us that such concerns lie ‘outside’ the concerns of architecture. The social – and often socialist – vision of the post-war estates being demolished to make way for the anodyne homogeneity of the new London vernacular is almost entirely lacking from contemporary practitioners. As Woody Allen might say, not since the Nuremberg Trials has the defence of ‘I’m just doing my job’ been so quoted by architects when confronted with the social realities of estates demolition.

11. As for an Englishman’s apparently innate desire to ‘own his own home’ – rents on the private market in Greater London have risen by 9.6 per cent in the past two years alone to an average of £1,540 per month (nearly $2,000). Over the next quarter of a century rents are predicted to rise at twice the rate of incomes, and renters will be twice as likely to live in poverty. Confronted with such uncertainty, who wouldn’t want to own their own home? But at the prices for which new builds in London are selling, home ownership in the capital has steadily fallen since 2003. Yet builders keep building more homes for sale at prices only the very wealthy can afford.

FACTS. Under the promise of home ownership millions of council homes were lost to tenants’ Right to Buy their council house at a state funded discount; but 25 per cent of the homes so purchased are now being rented out for higher rents by private landlords. A report released in January 2013 showed that in London 36 per cent of homes bought under Right to Buy, 52,000 former council properties, were being rented back from private landlords by local authorities trying to house their ever increasing numbers of homeless constituents. In 2015, property developers in London sold 5,300 two-bedroom homes costing between £650,000 and £1 million, but only 2,000 for around £300,000. 

12. In defiance of this housing need, the Government has promised £2.3 billion in state subsidies for 200,000 so-called ‘starter homes’, which now supplant previous provisions for social housing. Purchased at a 20 per cent discount on market rate, investors can sell these properties for the full price five years after purchase. It’s hard to imagine a greater incentive to property speculation. Not to be outdone, the London Mayor has just reduced his campaign promise to build 50 per cent affordable housing on all new developments down to 35 per cent; and his much awaited definition of a London Living Rent turns out to be yet another incentive to get on the property ladder. Even if he manages to oversee the 90,000 so-called ‘affordable’ homes he has promised in the next five years, at up to 80 per cent of market rate few of these will house the 250,000 London households currently on housing waiting lists, or the 240,000 London households with 320,000 children living in overcrowded accommodation, or the 50,000 London households with 78,000 children that are currently homeless and living in temporary accommodation.

13. Far from providing the much needed injection of capital required to build the homes Londoners need, the 25 per cent return on their investment builders are now receiving is assuring that the proportion of even affordable housing on new developments is being driven further and further down. Not a single London borough met its affordable housing quotas last year, with just 13 per cent of new homes approved as such – a 24-year low. By contrast, the five largest building companies made pre-tax profits of £2 billion, up from £354 million in 2010, and have promised an extra £6.6 billion in dividends to shareholders by 2021.

FACTS. In Elephant Park, a 2,535 apartment development in London’s Zone 1, international developer Lendlease, with the help of a viability assessment by real estate firm Savills, has managed to convince Southwark Labour Council they can only afford to replace the 1,200 council homes demolished to make way for the new development with 82 homes for social rent. On the 1 billion Bankside Quarter development being built on London’s Southbank, the same council has accepted that the developer, Native Land, which is backed by an international consortium of Singapore and Malaysian property developers, cannot afford a single affordable home in its 490 luxury apartments. The fact they offered the council £65 million to build them elsewhere may have helped. And on the Ferrier Estate in south-east London, the Berkeley Group is replacing 1,906 demolished council homes with 4,398 luxury apartments ranging from £412,500 for a one-bedroom apartment to £900,000 for a four-bedroom townhouse, not one of which is for social rent.

14. Worse, even, than its extension of the Right to Buy to housing associations, its introduction of market rents for households in social housing earning just over the minimum wage, its enforced sale of council homes that become vacant, its phasing out of secure council tenancies, and its removal of the obligation to build any new homes for social rent, the Housing and Planning Act has all but deregulated planning. Planning permission in principle will now be granted to any new housing development on the newly defined category of ‘brownfield land’. Previously used to refer to ex-industrial or commercial land that required clearing up before redevelopment, this now includes existing housing estates. It’s on the back of this legislation that the Government has announced its plans to ‘blitz’ 100 so-called sink estates, many of which will be located on London’s prime land. All that requires clearing up are the residents whose homes stand in the way.

15. Finally, in this vast programme of social cleansing, which will see the greatest change to the demographic of London in generations, architects are playing a role that future generations – if we should ever come out the other side of this historical moment – will look back at in shame, and wonder, much as we do now about the 1930s, how we could ever have let it happen.

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Architects are good at solving problems. But to come up with solutions to the current housing crisis we first have to recognise what that crisis is and what is causing it. Architects for Social Housing, which we set up two years ago in order to offer architectural alternatives to estate demolition, has being pursuing the following practical solutions.

Simon Elmer
Architects for Social Housing

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