Deputy Mayor of London Tom Copley slammed the Autumn Statement as "an enormous, missed opportunity" to address the acute housing affordability crisis that is raging on London's streets.
Copley described a city where the human cost of the housing crisis is bleeding into other areas. "It could be the cost to the NHS of people living in damp and mouldy accommodation or the cost of a child not doing as well as school as they should do because they are living in over-crowded accommodation.
"We are spending all of this money firefighting and if the Government invested a bit more upfront [into housing] we could be solving these problems," Copley told Homes & Property.
The Autumn Statement delivered in the House of Commons by the Chancellor Jeremy Hunt gave a few slight nods to the beleaguered housing sector, including increasing local housing allowance to help more families get out of temporary accommodation and removing planning red tape.
But no significant funding was announced to help deliver much needed new homes in London.
"We know we need £4.9bn a year for the next five years to allow us to build affordable housing at a scale that would actually match need," Copley says. In the short term, the deputy mayor also called for an injection of £470m of brownfield land funding to unlock 76,000 new homes.
The shortfall of new homes being built in London is growing. New research from JLL paints a worsening picture with the number of housing "starts" falling every year for the next five years.
London needs 90,000 new homes a year
There were 37,200 new homes built in 2021/2022 against a target of 52,000 (as set by the Mayor of London, Sadiq Khan and the Greater London Authority or GLA), a shortfall of 14,800.
So far, this year, the construction of 20,000 new homes have been started (JLL stats) as part of schemes of over 20 units.
By 2028 the cumulative shortfall of new homes needed will have hit 257,000, according to the JLL forecast.
"A cocktail of viability constraints means London's housing undersupply is expected to significant worsen over the next five years," says Nick Whitten, head of research at JLL.
Whitten is referring to a lack of available land, the steep rise in debt costs and dearth of construction workers. "This acute shortfall will continue to heap pressure on the already supply constrained sales and rental marketing worsening affordability issues across the capital," he adds.
A spokeswoman for the international property group Savills says the company believes that 90,000 homes a year are needed to have a proper impact on affordability in London.
Copley and Whitten were joined this week by a chorus of disgruntled housing commentators who felt Hunt's Autumn Statement undelivered, especially considering the dire financial backdrop that both renters and homeowners have endured over the last two years.
Mortgage holders have stomached 15 consecutive interest rate rises and for many a leap in repayments is looming, while tenants have seen their rent suddenly rise, in some cases up to 35 per cent, as reported by H&P.
In the introduction of her rebuttal, the Shadow Chancellor Rachel Reeves referenced the mortgage mayhem as sparked by the Conservative’s mini budget delivered in September 2022.
The topic was all-but ignored by the Government, aside from the extension of the Mortgage Guarantee Scheme.
The plight of the first-time buyer – who not only has to amass a hefty deposit to get on the housing ladder but must secure a mortgage as well at a higher interest rate – was ignored too.
Anthony Codling, analyst at RBC Capital Markets, says “the big levers were left unpulled,” with no announcements on stamp duty, Help to Buy or income tax. “The statement wasn’t detrimental but did little to help people get on or move up the ladder,” he adds.
“There was very little to help homeowners and first-time buyers,” agrees Paula Higgins of the charity Homeowners Alliance. “First-time buyers need more of a hand up. There are more barriers now than ever before and yet we have heard nothing today to help give young hardworking people the security and safety of their own home.”
Despite the enormous rental increases seen over the last 12 months, the bulk of tenants were overlooked in the statement, heightening fears of a talent drain from the capital.
“We are really in danger of people in the middle being pushed out of London by high housing costs,” says Copley. Which is why he is calling for rent control or devolution of power to local government so that the GLA can introduce such measures.
