Sarah Hayward: housing is still top of London’s ‘to-do’ list, so what can its councils do?

Sarah Hayward: housing is still top of London’s ‘to-do’ list, so what can its councils do?

The dust is settling on London’s local elections, and after a lot of froth and high expectations, nothing much has changed. Control of almost all of London’s councils is very much as you were. There are some changes in personnel that might signal softer changes of direction, but only two of London’s boroughs – Richmond and Kingston – are now led by politicians from a different party from last week.

As councillors return to their pre-election in-trays, the issues haven’t changed much either. London faces a plethora of challenges, for example poverty, Brexit, violence, health issues and inequality. But central to almost all of these is London’s housing crisis. London’s boroughs are on the frontline of dealing with its consequences and, with limited room for manoeuvre, on the frontline of trying to alleviate it.

This is a problem to which there are no easy answers and the longer it is left unsolved, the worse it gets and the more political it becomes. One borough’s attempt to solve its housing crisis resulted in dramatic deselections of councillors and ultimately the fall of its leader. This type of atmosphere could make the problem harder, not easier, to solve. All the time that London isn’t building enough housing, the number of people living in unsuitable homes simply grows. So, what can be done, and what options do London’s boroughs have?

It’s widely known that since 2010 local authorities have faced the most severe cuts of any part of the public sector under the government’s “austerity” policies. Even the Conservative chair of the Local Government Association regularly laments the financial pressures faced by authorities up and down the country. Often, however, the focus is on revenue budgets for frontline services. Rarely is the focus on the deeper cuts to capital budgets. After 2010 the government also reduced budgets for one-off expenditure, such as on house building, school buildings and transport infrastructure. This leaves local authorities and city mayors trying to come up with their own plans to plug the holes – sometimes quite literally – that were left by the reduction in investment.

Looking around the country, you’ll see different approaches to doing this and different scales of ambition. These in part reflect the local political environment, but also huge economic variations. Land values, house values and labour costs all differ wildly, and that applies within London too. Different boroughs own different amounts of land and have differing ambitions for its uses. This means there isn’t a single prescription that can be written to “solve” the city’s housing problems.

Many of the catch-all solutions that are suggested wouldn’t actually work across the board, even in the capital. One popular solution is to raise (or scrap all together) the limits that councils are subject to for borrowing to build housing. This would help in Camden, the borough I am a former leader of. Increasing the borrowing cap by just five percentage points would enable the council to raise in excess of £100 million to invest in building. But that is because Camden has high land values and the council retains a relatively large housing stock to borrow against. Doing this wouldn’t solve all the borough’s housing problems, but it would give a good jumpstart to building. However, most other boroughs are not in the same position, because they don’t own the same amount of housing stock, because their land values are lower, or both.

Building homes also takes time. If you decide to build a new home today it will, in all likelihood, take several years before people can move in to it, even if you already own the land. Building our way out of the housing crisis is the only viable long-term solution, but there need to be some shorter-term ones as well.

London has significant levels of under-occupation and significant numbers of empty homes. A combination of incentives and more punitive taxes could be used to encourage people to make better use of spare bedrooms and empty dwellings. Currently, councils can charge 150% of council tax on empty homes, and in Camden this is bringing property back on to the rental market. But the higher rate option could and should be much tougher, include enabling a council to escalate the rate the longer a property is left empty.

Anyone who lives in the private rented sector will tell you it’s a licence for landlords and letting agents to print money. There need to be significant changes to the way the private rented sector is regulated. Currently, local authorities have to prove a need to impose licensing schemes, which means that in many parts of London the quality of the private rented sector is down to its landlords alone. This should be flipped and councils should have the resources to properly regulate private landlords. We also need to change tenancies so that the default arrangement is for much longer term contracts with pre-agreed rent rises to give tenants greater certainty about their futures. And we must impose much more stringent regulation on lettings agents too.

Councils are trying to tackle some of these issues both in building homes for social rent and tackling poor practice in the private rented sector. The latter is in some ways easier, and many councils now have their own private lettings agencies. Many too are building to rent at rates that public sector workers, young families and graduates can afford. There is also increased use of voluntary landlord schemes where the thresholds for licensing can’t be met. But for real change, government needs to act.

The finances of building are challenging due to government cuts to capital spending and the long term nature of house building. The political climate too is not conducive to big schemes at the moment. This has been most starkly evident in Haringey, but all over London proposals for regeneration and major builds are being treated with suspicion. This isn’t easy territory for London’s politicians to navigate, particularly when they may be taking decisions to build housing that won’t actually be lived in until after they have left office and successors get the credit! There are no quick solutions to London’s housing crisis, which is why we need action now.

Sarah Hayward was leader of Camden Council from 2012 until 2017. She has also written for On London about the progress of women in the capital’s local government.  

Categories: Analysis

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