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.
Paul, I strongly suspect you would have opposed the house building of London in the 19th century, given the logic of your argument, such as it is. Your position is to say that what we have is enough. That things should just stop.
Even without immigration, a gradual rise in an indigenous population would require more homes at certain points. And some parts of a country become more populated, while others lose population. Which means some new homes get built, others are knocked down or reused as something else. It’s what happens in a free market economy.
Based on my comparative experience in British and Soviet housing, Paul Marks is too harsh on Soviet housing.
If we make allowances for wealth (as we should), then the Soviets did reasonably well in building flats for the middle & working classes. And (again, based on my experience in Estonia) they did not wreck city centers to do so: they built apartment blocks in the periphery, in concentric circles (allowing for physical geography, eg small lakes). That strikes me as much better than British urban planning.
Needless to say, this is not an endorsement of the Soviet model: it is a critique of the British model.
Snorri – you are correct about the historic centers of some Russian cities, the Soviets were indeed LESS radical than people such as H.G. Wells and the other Fabians and Bloomsbury Group people and so on – who wanted to destroy everything. But they did want people in blocks of flats under their control – they did not want people in independent houses.
Johnathan Pearce – what is it about you can not build stuff, where there are already houses, without destroying the houses that are already there, that you do not understand? In the 19th century London was expanding – it was tragic that the woods and fields were lost, but at least it was to house the natural increase of the native population (not immigrants – with the exception of a few, a drop in the ocean).
Are you suggesting that London expand in a similar way today? That would make all of sound east England “Mega City One” – are you volunteering to be Judge Dredd?
You know what the plan is – demolish the houses and gardens, and much else, and put everyone in blocks of flats – with everything (heating, everything) under central control.
The vision of H.G. Wells and the rest – perhaps going all the way back to Jeremy Bentham and his Panopticon – which Mr Bentham admitted to his close followers was NOT meant just for criminals (at least not just for people the Common Law would consider criminals).
There is also the question of what sort of city London is.
It is no longer the city of “dark satanic mills” – of production.
London used to be like Alexandra under the Roman Empire – a city of many manufacturing trades, and Alexandra, before the Emperor Septimius Severus, had no Corn Dole.
But London is now more like Rome under the Empire – after the free Corn Dole was established by the politician (and gang leader) Clodius. And it took a whole Empire to fund the city of Rome – Britain does not have an Empire.
There is indeed some production in London – even now. But nothing like sufficient to maintain its population – which depends either on open government subsidy, or hidden subsidy (“The City funds Britain” carefully leaves out the drip feed of funny money from the Bank of England – that is not included in the accounts).
And before Americans mock – have a good hard look at New York, Chicago, and other “financial centers”.
Paul: it is just unrealistic to expect Soviet planners to accommodate every family in independent houses. It is like an update of the spurious Marie Antoinette quote: if there are not enough flats, let them live in houses.
Besides, if you want to preserve the countryside, i should think that you would be in favor of dense housing.
Snorri Godhi.
I am against “planners” – Soviet or otherwise.
And the land they ruled was the biggest on Earth – there was plenty of room without destroying even 1% of nature.
In the cities a “capitalist” Russia would have seen houses, and shops and so on gradually extend, but in the Soviet Union even rural towns and villages were undermined – it was a very much a political project. Get people into housing blocks – where everything, including heating and light, would be centrally controlled.
The same is true in Britain – indeed the files of Durham County Council got exposed, how they deliberately (from the 1940s onwards) undermined rural communities, to get people into bigger towns, into housing blocks they could control.
By the way – this is why it is an illusion (and a very dangerous one) to see Mr Putin as an “alternative” to the World Economic Forum, and the rest of the accursed “International Community”.
Mr Putin is carrying on the same policies – 15 minute cities and all. Rural towns and villages in Russia are being undermined – not just in Soviet times, right now.
Rural villages and towns are falling into overgrown ruins – “rewilding” it is called in the West (or what was the West – but is no longer).
Get everyone, or as many people as possible, into blocks – where all aspects of their lives will be controlled by the state and “partner corporations”.
That is the agenda.
And, by the way, that is the real reason they are against private cars – especially cars that are powered by oil (not electricity) and do not have on-board electronic systems – which can be used to restrict where the cars are allowed to go, or to just turn them off.
In the old days of private rail lines every small town (even big villages) had a railway station – but they have also gone. First the private railway companies were unionised and regulated (price controls and so on), then destroyed.
Now people can not move about by rail – not in many places.
In the United States (although, sadly, not here in the United Kingdom) many of the rail lines still exist – they now mainly carry cargo – not passengers. But if government backed “Collective Bargaining” (see W.H. Hutt “The Strike Threat System” – for how Collective Bargaining is mainly a government imposition) was repealed, and such government regulators as the “Interstate Commerce Commission” (ICC) were abolished – passenger rail services to small communities would become profitable again.
Paul Marks:
No it wouldn’t. Passenger rail is very inefficient at moving small numbers of people between dispersed locations. It has high capital costs and minimal flexibility. Except for those who cannot drive because of disability or poverty, travelers far prefer the disaggregated system of personal motor vehicles.
For those exceptions, buses are the best alternative.
(There is a myth that Big Auto Companies killed off urban light rail. In fact it was going broke, and was replaced by buses.)
Passenger rail is a great fancy of liberal statists, who openly admire its genuine efficiency in moving large numbers of people when there are large numbers to move, and tacitly admire the controls it imposes.
I am surprised that you would buy into this syndrome.