The public sector’s vast bank of unused land is a national disgrace

Dan Gandesha
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Lord Adonis pointed out last year that London’s councils owned on average between a quarter and a third of all the land in their boroughs (Source: Getty)

So Brexit means that overseas demand for London property will decline, prices will fall and the housing crisis will ease, right? Think again.

Whatever the effects of Brexit on London house prices, short or long term, the basic problem persists: the capital faces a chronic shortage of homes. Demand for all but the most expensive houses will, for the foreseeable future, far outstrip supply.

For perspective, consider this – researchers at PwC have calculated that, by 2025, 60 per cent of Londoners will be renting. This continuing lack of affordable homes is arguably a much bigger threat to most people’s prosperity than any economic shock from the vote to Leave. This is why new London mayor Sadiq Khan is absolutely right to focus on building more homes. It is critical to our capital’s future.

The scale of the shortfall was laid bare in a report published earlier this year by the London Housing Commission. It warned that the city’s supply and pricing crisis was now “of a different order”. With housing affordability stretched to the limit across all 32 boroughs, people are being forced to suffer much longer commutes or even mounting debt, if they cling on in the city.

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With the capital’s population set to rise by a further 1.5 million by 2030, the London Housing Commission said that we will need to build a whopping 500,000 homes in London over the next decade – just to keep pace with demand. Half of these should be for sale or rent at affordable prices. The sad fact is that the city has not even managed 50 per cent of these targets over the past 10 years.

There is, of course, no silver bullet. Filling empty homes will help. So will converting offices and warehouses into residential properties. But the Commission made clear that these were, at best, only a partial answer. London will still need offices and warehouses: we cannot turn everything into flats. The inescapable truth is that we must build tens of thousands of more new homes every year.

A radical gear-change requires radical reform. UK planning laws are some of the most sclerotic and restrictive in the world. They need a rapid modernisation, so that development can take place much faster.

We also have to find the land on which to build the capital’s new homes. The good news is that, even in a world city like London, there is no shortage of underdeveloped land. Some is owned by private developers who have lacked the investment or incentives. Easing planning restrictions will help on this front.

But a colossal amount of unused and undeveloped land is sitting idly in public hands, including local authorities and government agencies. This represents a far bigger “land bank” than any private developer can access.

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If Khan wants help in identifying this surplus land, he need only walk down the corridor to speak with Andrew Adonis, chair of the Crossrail 2 board. Last year, Lord Adonis pointed out that London’s councils owned on average between a quarter and a third of all the land in their boroughs. A third! Southwark, for example, owns no fewer than 10,000 garages, largely on its housing estates. Most are rundown and ripe for redevelopment.

Take Transport for London as another example. It owns an area of land 15 times bigger than Hyde Park. This includes 61 car parks and hundreds of stations with little or no development above or within them. Many, including central London stations, haven’t changed since they were built a century ago.

Network Rail, the NHS, the Ministry of Defence and a plethora of other government departments and agencies, all have massive landholdings in the capital, much of it surplus or relatively undeveloped. You can start to see the scale of the problem, and the opportunity.

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In London, surplus public assets include much of the most valuable land in the world, in the face of a crippling housing shortage. Lord Kerslake, former head of the Civil Service, has described this as Britain’s worst public policy failure of recent decades.

The failure is particularly acute for Londoners. Land in this city is by far the biggest cost in providing new housing, and the exorbitant price is a particular obstacle to building new social or affordable homes for rent.

The release of surplus public land in London is imperative. Doing so would be good for housebuilding, good for our post-Brexit economy and good for social justice.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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