OVER four days, 300 people queued in a field by Heathrow to buy a home. It was 1964, and for £50 people could fulfil their homeowning dream in the soon-to-be-built suburb of Sunbury-on-Thames. The first 187 people did.
Those odds don’t feel dissimilar to those faced by Londoners in today’s booming property market. The answer is to build more homes – double, to address a historic failure to build enough – and to build more quickly. The signs are good, with both construction orders and homes registered to be built at an all-time high, and with the mayor so far building 75,000 low cost homes to rent or buy. But what’s more challenging is completing schemes more quickly.
Take this striking fact. Evidence gathered by City Hall shows that there are around 200,000 unbuilt consented homes in London. The figure suggests large-scale landbanking. There are indeed some speculators, with no intention of building. But that’s only a partial explanation. Interrogating those figures further reveals three-quarters of the homes are on large multi-phase developments, often of 500 homes or more, owned by traditional housebuilders. Starting construction isn’t the problem, it’s accelerating it.
This is the conundrum London housebuilding faces. The traditional builder model means that these bigger schemes will often take years to be built out, managing multiple risks, high land prices and an illiquid end product. Build-out rates have to ensure economic viability, without which the scheme wouldn’t happen at all.
The model works, but will only deliver roughly half the homes London needs, possibly a bit more if bold commitments made by some are delivered. If we’re to smash the brick ceiling that’s constraining supply, we need a fundamentally different approach to the pre-crash market – supplementing the traditional builders by attracting new players, new forms of investment, and new products.
This week, the mayor launches a consultation to create a new London Housing Bank, aimed at speeding up these major schemes. It works like this. Rather than waiting years, the mayor will provide up to £200m to developers to build around 3,000 homes now. They will be let at less than the market rate, which means they will not only be more affordable, but will also avoid competing against the market sale that developers are mostly doing on the earlier phases. Then in ten years, the loan or equity is paid back to City Hall and the homes sold on, to an institution, housing association, or even to the occupiers themselves. It’s like landbanking but with homes on it.
It is one of a series of new approaches being tested by the mayor, from a massive expansion in shared ownership to purpose-built institutionally-backed rented homes, from turning brownfield land into new garden suburbs to Housing Zones, a residential-led version of the Enterprise Zones that regenerated the Docklands. It is this mix of innovation, both in the public and private sectors, that’s needed to get housebuilding back to levels last seen in the 1930s.
Richard Blakeway is the deputy mayor for housing, land and property.