The London housing shortage — it’s simple maths
London is about to elect a new Mayor. At data-driven news site urbs.london we decided to have a look at some of the numbers behind the big election issues. Here’s the first of our long reads.
The population is 8.6 million and the city is struggling with a shortage of housing. Sounds familiar? While this describes London today it also portrays the capital in the late 1930s.
After a post-war decline, the population has just got back to the 30s peak and a housing crisis has come back too. So what has happened to house building in the intervening years? How did London find itself with a similar problem?
First, a bit of urban history. The shape of the capital has changed. In 1939 far more people lived in central London — 4.4 million lived in inner boroughs while 4.1 lived in outer ones. The most highly populated areas were Southwark, Tower Hamlets and Lambeth, and can be seen as the darker areas on the map.
By 2015, the population of inner boroughs had fallen by 1 million while the outer boroughs have swelled by 24% to 5.1 million. The most highly populated areas today are Barnet, Croydon and Ealing.
This switch in population from inner to outer came about because of house building. The population surge of the 30s was met with a surge in building, and most of it took place in outer areas.
This lure of new housing in the suburbs and the loss of central London housing in the Blitz helped reshape the capital.
In the last decade fewer homes were built than in the 1960s and 70s, when the population was shrinking. House-building has failed to keep pace with the population.
Since 2002 London has seen a 21% increase in jobs and a 16% rise in population. Over the same period new homes have increased by 11%.
The 11% figure disguises a stark difference between inner and outer boroughs and where those homes have been built. Data from the Department for Communities and Local Government shows that there has been a 37% increase in the number of homes in Tower Hamlets since 2001 and a 20% increase in Islington. But in the same period the growth rate in dwellings in 16 outer boroughs has been in single figures — with just 4% in Sutton and 2% in Merton.
This pattern of growth is a reversal of what happened through most of the 20th century when more than half of the new housing stock was provided in the outer boroughs.
This growth in inner areas is not uniform however. 28% of the housing stock in Tower Hamlets was built this century, the highest proportion anywhere in the UK. It has the space through the redevelopment of areas like Canary Wharf and Limehouse. Kensington and Chelsea in contrast has seen a 2% growth in homes due to the lack of brownfield sites.
The building in inner London means these areas are becoming more densely packed. Housing density is measured in dwellings per hectare. The average for England as a whole is 1.8. The average rate for London is 21.5. For Inner London it is more than double that again at 44.6. And for Kensington and Chelsea, the borough with London’s highest, it is 69.1 dwelling per hectare. The lowest density is Havering with 8.7 dwellings per hectare. Havering is 10 times larger than Kensington and Chelsea. If it were to have the same dwelling density as the Royal borough it would have nearly 800,000 homes not the 100,000 it has currently.
As in the 1930s, the location of home building is pulling the population. The biggest rate of growth in the past 12 months is in the City of London, but the numbers are small. After that it is Tower Hamlets where there has been at a 2.3% rise in residents in a year.
The GLA’s forecast for the next 25 years shows that Tower Hamlets will lead the growth in residents, closely followed by Newham as many head east in search of a home.
But can building keep pace with demand? New home starts are climbing back towards where they were 10 years ago, but it is still not enough and the problem is widely acknowledged. In his housing strategy document last year, the outgoing Mayor, Boris Johnson, said that housing was an “epic challenge” and that the number of new homes being built in the capital would need to double to 42,000 per year for the next 20 years to keep pace with population growth.
House building in the capital has been bumping along at around the 20,000 level for the past 10 years. Following the financial crisis of 2008 it dipped sharply.
Most of the homes being built are in the private sector, not social housing, which raises issues about affordability. Even in the ‘affordable’ sector a shift has taken place.
More affordable housing was delivered in London in the 2014–15 financial year than for any period dating back to 1991. 17,913 homes were built or acquired and made available (so not counted in the new starts chart above) in the affordable rented sector, according to data from the Department for Communities and Local Government, and the GLA.
Affordable rents were previously available through what was termed social housing. This is rented property provided by a council or a housing association with long, secure tenancies and rents at around 50% of the market rates.
Housing associations also provided Intermediate rental. This gives a tenant a subsidised rent, usually around 60% of the market rate, while they save for a deposit to buy the property.
In 2010 the government introduced a new category, which it confusingly called Affordable Rent. This aimed to give social landlords a route to maintaining or increasing the amount of lower cost rental while relying less on public funding. It allows them to charge more and have less restrictive tenancies. Affordable Rent properties can charge up to 80% of the market rate.
It is this sector that has taken off in the past year, increasing the amount of affordable housing, but the amount of Social Rent housing has declined sharply since AR was introduced. And this is not due to the building of new stock alone. Some Social Rent property is re-classified as Affordable Rent when it becomes vacant.
The last time the delivery of affordable housing was at this level was in 2011–12. In that year a comparable number of Intermediate Rent properties were made available. But there were 11,374 Social Rent homes. In 2014–15 that had been reduced to 3,053.
All candidates are making pledges about houses but perhaps the voters’ decisions on the housing issue comes down to the answers to 3 simple questions. How many houses will you build, what sort of homes will they be and where will you build them?