How London’s housing shortage is threatening the capital’s competitiveness
Much has rightly been written about the social impact of the housing shortage in London. This has laid bare the many difficulties people have finding affordable property to rent, getting on the housing ladder, upsizing, and downsizing. Less attention, however, has been paid to the economic and political dimension of this issue and the long term consequences that a lack of housing supply could have on London’s competitiveness.
To this end, Turner & Townsend and London First (a non-profit which aims to make London a better city for business) commissioned YouGov to poll four key groups in London – employees, employers, the general public and local councillors - to gauge their views about housing and, in particular, to understand how these groups respond to the lack of housing supply and rising prices.
The surveys contain a wealth of information but there are two compelling findings that stand out. These are:
Reverse brain drain
While London is commonly associated with attracting the best talent from the UK and around the world it is in danger of losing workers due to a lack of new homes and rising prices. Many London employees would currently consider leaving the city to work elsewhere due to difficulties with paying their rent or mortgage. The number of employees who said their rent/mortgage costs made it difficult to live and work in London outnumbered those who found it easy by a ratio of two to one. The results indicate that it is not until employees are earning over £70,000 and/or over 60-years-old that the proportion who find it easy to service mortgages and rents balance out with those who find it difficult. This threat is echoed by businesses, with three-quarters of those polled warning London’s housing supply and costs are “a significant risk to the capital’s economic growth”.
Not so NIMBY
Londoners are less NIMBYish than their politicians think. Only one in six voters (17%) said they would view their local politicians in a more negative light if they advocated building more homes in their area; with a surprising 41% of public respondents saying they would look on a politician more favourably if they were to back more housebuilding in their community. Around a third of London councillors think they would receive less support if they advocated housebuilding. However, it is clear that overcoming local opposition to greater volumes of housebuilding is still a barrier that needs to be broken down, particularly in outer London.
49% Londoners would consider leaving if house
prices and rents in the city continue to rise at present rates over the
next ten years
3/4 businesses polled say London’s housing supply and costs are a significant risk to the
capital’s economic growth
70% 25-39 year-olds polled say they find the cost of their rent/mortgage
makes it difficult to work in London
38% London businesses say they are concerned about
the impact that London’s housing supply and costs are having on their
ability to recruit and retain staf
When we asked councillors about barriers to development, perhaps unsurprisingly, the perceived lack of land was top of the list. We suspect, however, that it is not a lack of land per se, but a lack of serviceable land and supporting social infrastructure that restricts development. The introduction of the Community Infrastructure Levy and innovative techniques to cost-effectively unlock development sites may go some way towards overcoming this hurdle.
These projects and others open up the opportunity for new, higher density place-making in locations with fewer development restrictions and cheaper development costs. A big challenge is the mechanism for delivering the range of quality housing products needed to meet the aspirations and incomes of London’s financially diverse population, be they first time buyers, growing families, long term renters or downsizers.
London’s housing dilemma presents opportunities for those towns within commuting distance of the city. Increased investment in the rail network, such as Thameslink and Crossrail that will bring improvements both to travel times and capacity, must continue.