London’s housing supply is not fit for purpose, and we need a bit of bravery to fix it
The housing market in London is extremely hard to navigate. Students looking for a flat to rent with two or three friends often have to give up on the idea of a living room for reasons of price. Older couples who might want to relocate after the kids have moved out often don’t, because there’s nowhere smaller to move to in their area. We shake this off as the “London trade-off”: flats are expensive and hard to find, but it’s the price of living in the capital.
Yet these gaps in the housing supply massively exacerbate the housing crisis. Our housing market looks like Swiss cheese, with holes everywhere. No one is filling them up, so the space that could be used for new homes gets eaten up by the dysfunctional housing apparatus.
Anyone who’s been a student in London is familiar with the flatsharing service SpareRoom. But while 30 per cent of people looking for a room on the platform are aged 18-24, the bulk of the users is made up by people between the ages of 25 and 34, at 41 per cent. Young adults in the UK still live like students, sharing a property with people their age rather than being able to afford one for themselves.
The problem at the heart of this unbalanced housing supply in the capital is “overconsumption”, according to SpareRoom Director Matt Hutchinson. Those who can afford it buy more space than they actually need, hoping the property’s value will increase over time. “Properties are not evenly distributed. There are millions and millions of spare, empty bedrooms in people’s houses in London”, says Hutchinson. Extra floor space is a valuable commodity – for those who can afford to keep it and heat it. But if we understood the intrinsic value of downsizing, in parallel with the need to build more, we could make a dent in the housing crisis.
There are different ways to look at this, but let’s pick one. Let’s think of older couples deciding to sell their half-empty family home to move somewhere more suited to their needs. This would create a ripple effect: as they move to more suitable homes, younger families can occupy their property, in turn freeing up space for students looking for bigger, affordable spaces.
But these alternatives are not there. Purpose built communities for older people would save up space and money. People spend more time in hospital if they live in general housing than in purpose built accommodation, increasing costs for the NHS. “Having older people in a community designed for them would mean cost reduction in thousands of pounds a year for local councils”, says Lawrence Bowles, director of the Savills residential research team.
This country’s population is ageing, so this is not going away any time soon. But like with many other policy issues, how much of a nudge is too much from the government? Something called “the bedroom tax” already exists. People renting a council or housing association property can see their housing benefits reduced if they live in a flat with a spare bedroom. But ultimately, the solution isn’t to use tax or other legal “punishments” to encourage people to downsize. People will do it if what’s offered is attractive and convenient. “Right now, there’s just no stock available. If you fix that, you should unlock the rest of it”, says Bowles.
To kickstart this unlocking, the industry and local and planning authorities should be a little bit braver. According to Anthony Breach of Centre for Cities, the housing supply problem is more than a decade old. One single policy won’t fix it. But several gradual changes in the priority given to different developments might.
There’s lots of casual micromanagement of specific proposals, like how small flats can be, and “very little thinking about the big picture”, says Breach. Industry leaders know there’s a gap for smaller houses, and know that downsizing could revolutionise the market. Yet they smell risk because almost no one has been doing this in the sector. Promoting the development of the bits in the housing stock that are missing, maybe through planning facilitations, could provide the necessary nudge to do things differently. If there’s one thing that won’t do any good to our already screwed housing supply, that’s inertia.