Homes fit for Londoners: Solving London’s housing crisis

This report builds on our earlier research into the state of London’s housing market, proposing solutions to resolve the capital’s housing crisis.

The capital’s homes are failing to meet the needs of Londoners. A quarter of residents are left in poverty after paying their housing costs. Over 300,000 London households are on the waiting list for social housing. Rough sleeping has increased by 50 per cent in the last decade.  

To fix this crisis, we need to solve three deeply rooted failures in London’s housing market. We need to build more homes to accommodate our growing population, both through densification and sustainable outward extensions. We also need to make the city’s housing market fairer, by supporting renters on low incomes to afford their homes and collecting more of the land value created by public investment. And last of all, we need to plan for housing over the long-term, maintaining investment into homes instead of volatile, short-term grants.  

Failing to fix the housing crisis could have serious consequences. High housing costs could push key and skilled workers out of the capital, reduce disposable income, with knock-on effects for the economy, and push councils towards bankruptcy by increasing their bills for temporary accommodation.  

People living in the right home brings huge benefits to society, as well as individuals – we believe that housing should be thought of as critical infrastructure. We need to double the number of homes built annually from 37,000  to  74,000 a year for 15 years to solve London’s challenges with affordability and homelessness challenge. Delivering the homes that England and its capital needs will require a coordinated approach, with governments working collaboratively with the private and third sectors. The cost of fixing this is high, but the cost of inaction will be higher. 

Key recommendations:  

  1. The Mayor and national government should set up Development Corporations to build on strategically defined areas of the Green Belt, and ensure they compensate for any loss of nature. One estimate suggests that using less than 2 per cent of England’s Green Belt land could deliver between 1.7 and 2.1 million new homes, while still creating thousands of hectares of new public green space. 
  2. National government should increase its investment into the Affordable Homes Programme (AHP) to £15.1 billion a year to fund the building of 90,000 social homes a year in England—more than 30,000 of those should be built in London.
  3. National government should create an Affordable Housing Commission, which uses expert projections to set affordable housing grant over 10-year terms. This would make sure that spending on affordable housing is proportionate to levels of need and stop politicians raiding housing budgets to meet arbitrary targets.
  4. National government should commit to annually indexing the Local Housing Allowance (the part of the benefits system which helps with rent) to rent levels. Unless the government commits to continuing to reflect the actual price of renting, rising costs will fast erode this support.
  5. National government should end the Right to Buy scheme to keep social homes in public hands, so that more Londoners can live in secure, affordable homes over the long-term.
  6. National government should devolve control over property taxes, like council tax and stamp duty, to London. Once this is achieved, we recommend the Mayor of London implement a fairer tax model, such as proportional property tax.

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