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The Chartered Institute of Housing is the independent voice for housing and the home of professional standards

Help London councils get more affordable homes for rent built says CIH London

26/10/2015


London councils should be allowed to require developers to build affordable homes for rent as well as the government’s new ‘starter homes’, according to the Chartered Institute of Housing (CIH) in London.

The recommendation is part of a series of proposals submitted by the organisation’s regional board in the capital to the London Housing Commission, which has been set up to examine potential solutions to London’s housing crisis.

Prime Minister David Cameron announced earlier this month that section 106 rules will be changed so that councils can require developers to build starter homes (homes for sale at a 20 per cent discount to first-time buyers under 40) rather than just affordable homes for rent.

But the CIH London board argues that local authorities in the capital should still be able to require developers to build homes for rent if it will make housing more affordable for local people.

It comes after an Ipsos MORI poll for London Councils revealed that more than a third of Londoners were actively considering taking a job elsewhere because of high housing costs.

The CIH London board’s submission to the London Housing Commission also calls for the government to:

  • allow councils in London to borrow more against their existing homes and land so they can build more homes
  • prioritise inner London brownfield sites which require minimum investment in transport and other infrastructure, so new homes to buy and to rent can be built for people on lower incomes close to their work
  • make sure councils have the resources they need to bring empty homes back into use more quickly.

CIH analysis has shown that the gap in house prices between London and the rest of the UK reached a post-war peak in 2014. House prices in London were 85 per cent higher than the UK average, while the average household income was only 32 per cent higher. And London is the only place in the UK where buying a house is less affordable now than it was at the peak of the housing market boom in 2007. The average London rent is more than £1,400 a month, and private rents are expected to rise by 32 per cent by 2020.

The late housing expert Dr Alan Holmans estimated that around 56,350 homes need to be built every year in London to keep up with its growing population. But only 18,260 new homes were completed in the year to March 2015.

CIH London board chair Jan Taranczuk said: “Our national housing crisis situation is particularly acute in London, where prices are highest. Many areas are well on the way to becoming out of bounds to all but the very wealthiest households – if things carry on as they are ordinary people will simply not be able to afford to live in many areas of the capital.

“The best way of making housing more affordable for everyone in London is to build new homes of all tenures – for home ownership, shared ownership, private and social rent.”

The regional board’s submission also warns that the extension of right to buy to housing associations will need to implemented very carefully – and could need extra funding – to make sure that council homes in London are not lost. The government has said that the policy will be funded by the sales of high-value council homes, which will have a disproportionate impact on the capital. CIH warned earlier this month that nationally up to 7,000 council homes a year could be lost unless extra funding is provided.

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