Government housing minister Brandon Lewis has admitted defeat in the face of the housing crisis: Generation Rent can't make a "judgement call" about where they live

Dan Wilson Craw
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The last time England built 200,000 homes a year was in the 1970s (Source: Getty)

The government has admitted defeat in the face of the London housing crisis. At least, that was the conclusion I drew yesterday when the housing minister told people hoping to stay in London to make “a judgement call about what you can afford and where is right for you”.

By being “up front about the fact that, in London, we have got a finite space”, Brandon Lewis was essentially saying that his housebuilding plans won’t make a difference to affordability so residents on modest incomes should start making plans to up sticks.

That presumably includes teachers and nurses whose incomes could never buy them a family home within a reasonable commute of work at current prices – but could outside the M25.

Read more: Help to Buy Isa launch - here's everything you need to know

If rents are going to keep rising, who is going to cook and serve meals in London’s world-class restaurants?

How can London hope to retain its cultural and entrepreneurial vibrancy if its residents can’t afford to take risks?

Even in well-paid parts of the private sector, London’s employers will struggle to attract and retain talent if other world cities offer a better quality of life.

Not only does the government lack ambition for housing London’s young and underpaid, its prescription – only building new homes to buy – is the wrong one.

The new London Help to Buy scheme will give first-time buyers a 40 per cent equity loan on a new build house. Only around 12,000 private homes are built per year in London – less than two per cent of the city’s increasingly desperate private rented population. The scheme will be oversubscribed, giving developers an excuse to bump up prices.

Starter Homes are just as bad. Even if the price was right – the 20 per cent discount on a £400,000 average first home in London is still unaffordable for households on the average income – each Starter Home would help only one first-time buyer, who could sell it on at full market price after five years. If the homes were made affordable in perpetuity, then we might be talking.

But the government plans to give subsidy to private companies and relatively well-off households at the expense of the vulnerable and low paid who are never adequately served by the market.

Ministers should understand that the housing market isn’t a set of silos – prioritising social housing would benefit first-time buyers too. If the government built social housing instead, many private renters could move tenure, easing pressure on rents in the private sector, and allowing tenants there to put away more for a deposit each month. And, of course, each social home would be eligible for Right to Buy anyway.

The last time England consistently built 200,000 homes a year, in the 1970s, nearly half were built for social rent. That isn’t a coincidence.

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