Housing supply

London’s housing supply isn’t fit for purpose, and we need a bit of courage to fix it

Monday, May 16, 2022 6:00 a.m.

The housing stock in London does not meet existing demand. (Photo by Dan Kitwood/Getty Images)

The housing market in London is extremely difficult to navigate. Students looking for an apartment to rent with two or three friends often have to give up the idea of ​​a living room for price reasons. Older couples who might want to move after the kids leave often don’t because there isn’t a smaller place to move to in their area. We see this as the ‘London compromise’: apartments are expensive and hard to find, but that’s the price of living in the capital.

Yet these gaps in housing supply massively exacerbate the housing crisis. Our housing market is like Swiss cheese, with holes everywhere. No one fills them, so space that could be used for new homes is gobbled up by the dysfunctional housing apparatus.

Anyone who has been a student in London knows the SpareRoom roommate service. But while 30% of people looking for a room on the platform are between the ages of 18 and 24, the majority of users are people between the ages of 25 and 34, at 41%. Young adults in the UK still live like students, sharing property with people their own age rather than being able to afford one for themselves.

The problem at the heart of this imbalanced 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 that the value of the property will increase over time. “The properties are not evenly distributed. There are millions and millions of free and empty rooms in people’s homes in London, Hutchinson says. 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, alongside 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 choose one. Think of older couples who decide to sell their half-empty family home to move to a place more suited to their needs. This would create a ripple effect: by moving to more suitable accommodation, young families can occupy their property, freeing up space for students looking for larger, affordable spaces.

But those alternatives are not there. Purpose-built communities for the elderly would save space and money. People spend more time in hospital if they live in general accommodation than in purpose-built accommodation, which increases costs for the NHS. “Having older people in a community designed for them would mean cost savings of several thousand pounds a year for local councils,” says Lawrence Bowles, director of Savills residential research team.

The population of this country is aging, so this is not going away anytime soon. But as with many other political issues, how much of a push is too much from the government? What is called “the tourist tax” already exists. Tenants of council or housing association housing may have their housing benefit reduced if they live in an apartment with a spare bedroom. But at the end of the day, the solution is not to use tax or legal “punishments” to encourage people to downsize. People will if what is offered is attractive and convenient. “Right now, there is simply no stock available. If you fix that, you should unlock the rest,” says Bowles.

To start this unlocking, industry and local and planning authorities would have to be a little braver. According to Anthony Breach of the Center for Cities, the housing supply problem dates back more than a decade. A single policy will not solve the problem. But several incremental shifts in the priority given to different developments could do just that.

There’s a lot of occasional micromanagement of specific proposals, like how small apartments can be, and “very little thinking about the big picture,” Breach says. Industry leaders know there is a gap for small homes and know that downsizing could revolutionize the market. Yet they feel the risk because almost no one has done it in the sector. Promoting the development of missing elements of the housing stock, perhaps through planning facilitations, could provide the nudge needed to do things differently. If there’s one thing that won’t do our already ruined housing supply any good, it’s inertia.