Over at Bloomberg, columnist Matthew Brooker notes that a mix of policies have caused London’s housebuilding sector to almost stop.
Homebuilding in London has all but ground to a halt. The capital is on track to deliver less than 5% of its annual target of 88,000 homes with half the year gone, by far the worst performance in two decades. Such a collapse in the UK’s largest and richest city would be a poor omen for economic growth and productivity at the best of times. For this to be occurring under a one-year-old Labour government that arrived in office promising a generational uplift in housing supply is extraordinary.
The figures almost defy belief. Housing starts have fallen by more than 90% compared with the financial year ended in 2023, official data from the Greater London Authority show.
The reasons:
Why is this happening and what can be done? The words “perfect storm” crop up frequently. A thicket of interlocking factors is at play, some of which have built up over years. On the supply side, the immediate trigger is the creation of a new Building Safety Regulator, or BSR, with a set of more stringent requirements for high-rise buildings in the wake of the 2017 Grenfell fire, which killed 72 people. Delays in approvals have compounded post-pandemic challenges of inflated construction costs and higher interest rates.
Meanwhile, successive tax changes, some dating back more than a decade, have driven away offshore investors, according to Molior founder Tim Craine. Developers build only in response to demand, he points out. Investors who buy apartments “off plan” before they are complete play a crucial role in financing construction and providing a signal of likely end-demand. Their declining presence has raised speculative risks and undermined the financial viability of projects.
Former Conservative Chancellor of the Exchequer George Osborne targeted a series of tax measures at buy-to-let investors in the belief that they were driving up house prices and squeezing out first-time buyers. The trouble is that the private-led investment model is intimately connected to the delivery of affordable housing for deprived communities. London boroughs grant planning permission for apartment complexes on condition that developers designate a portion, typically 35%, as affordable. These are bought by housing associations that then sell or rent them out at discounts to the market. If there are no private buyers, there will be no affordable housing either.
The article makes no reference to the current immigration issue in the UK, but it is fair to say that even without large net inflows of people to the UK, the low level of house building and new residential accommodation is a problem if we want a refurbished, modern housing stock. Add in the immigration issue, then we have a crisis. The current UK government made much of housing when it was elected last July. The data for London is lamentable.
The article also reminded me of the planning dysfunction, among other things, that was identified as problems in last year’s major “Foundations” report into why UK seems unable to get anything built, and certainly erected on time, and on budget, these days.
My former Member of Parliament has had a house up for sale in London, in Blackheath (which is a supposed to be a good area) for a year now – he can not sell the place.
Nor can he let it out – as, under the new regulations, it is very difficult to remove a tenant if you let them in – so fewer and fewer people are letting properties, they are standing empty instead (soon the left will demand that they be confiscated – or will organize “squatting”).
As for building – I can remember when some of the horrible blocks of flats in London were being demolished, back in the 1980s – now there are more blocks of flats in the London area than ever before, they have gone up all over the place. So much for “building is at a stand still” – there are blocks of flats where there used to be nice houses and gardens and so on.
What has led to this, is the vast increase in population in London due to IMMIGRATION and the natural increase (births) of the new populations.
This means that even as English people flee London (British people used to sneer at Americans over “white flight” – now they are finding out that there are good reasons to flee) – the population of London has vastly INCREASED, increased by MILLIONS.
Building yet more blocks of flats in London will solve nothing.
As John Cleese (the “Monty Python” man – and a lifelong liberal) pointed out – London is not an English city anymore.
ULEZ and all the ‘traffic calming’ (driver infuriating) obstructions are another massive straw on the proverbial overburdened camel’s back.
… no great surprise, really.
I mean, seriously, did anyone who doesn’t sleep with a copy of the Labour Party constitution under their pillow honestly believe there was ever going to be any “generational uplift in housing supply”?
I keep seeing commenters say there’s a lot of rental housing being built. Does this statistic omit apartment buildings?
I guess it’s also possible that there’s a lot of blocks of flats that have stalled construction. They’d never be completed, so they might not count for the official statistic, but you’d still see a lot of construction sites. It seems that many of these projects were completed in the past, but maybe this year a surprisingly large number have stagnated?
Of course, there’s always the possibility that the official statistics are gamed, or just fraudulent; or some sort of awareness bias making it seem like more rental units are built than are actually built. It’s not worth accessing Bloomberg’s paywall just to see if the linked article covers it.
@Paul Marks: it is not either/or. The disaster of rental reform is as you describe, and I agree that it is horrible. The planning system is also a big problem – and the problems go beyond housing.
Johnathan Peace – they can not build houses where there already are houses – not without destroying the existing houses, London is already there.
The idea, which is already happening, is to destroy the houses and gardens (and much else) and replace them with blocks of flats.
This has been done before, by the Soviets – it is what they did outside the historic centers of Moscow and St Petersburg (or “Leningrad”) and other cities – it was an idea that was copied in other countries such as Britain (we also copied their health system – and pretended it was a British invention).
The endless millions of from all over the world are to be “housed” in these blocks (which H.G. Wells was having wet-dreams about at the turn of the 20th century – see “In The Days Of The Comet” – his totalitarian fetish dressed up as science fiction) and are to live on a government “basic income”.
We both know the plans of the international establishment are both evil and insane.
They will not work – but they will cause terrible harm before they finally collapse.
Russia is the biggest country on Earth – and its population is only about twice that of the U.K. (in spite of being dozens of times bigger) – so why do so many Russians live in little flats, in ugly blocks, sharing their space with drunks and drug addicts?
Because of “ideology” – a word that Marxists use to attack other people, but are themselves more guilty of than anyone.
The Marxist Soviets (like that utter swine H.G. Wells) WANTED people to live in blocks of flats in cities – under-their-control (remote controlled heating systems and all the rest of it – economic and social, as well as political totalitarianism)
And this ideology continues under Mr Putin – he systematically neglects rural areas, in order to subsidize the cities.
And this ideology is also becoming dominant in the United Kingdom.