The housing crisis that has seen hundreds of thousands of people in London struggle with soaring rents and rising house prices will broaden dramatically because of a sharp reduction in affordable homes, according to research.
Analysis of the government’s plans to extend the right to buy, and the forced sale of council houses in the housing bill, claims there will be more than 21,000 fewer affordable properties in the capital by 2020.
The research, by Labour mayoral candidate Sadiq Khan, also says the government’s proposals – scheduled to go before parliament again next month – could result in more than £800m in housing funds sucked out of London each year.
“The housing crisis in London is bad now but as a consequence of this bill it will fall off a cliff edge,” said Khan, who is making housing a leading issue in his attempt to become the capital’s mayor in May. “It is going to be catastrophic for hundreds of thousands of people who will see rents and house prices rise and a steep decline in the number of affordable properties.”
The housing bill will extend the right to buy to housing association properties, paid for by the forced sale of council homes. This means housing association properties can be bought at a discount, with the difference made up by the sale of the most valuable council properties.
Khan said this would lead to a big reduction in affordable housing in London – as both council homes and housing association properties are sold off – and that the money given back to housing associations was likely to be spent outside the capital.
“This policy is going to have a devastating impact on housing in London, especially for families or those trying to get on the housing ladder,” he said. “Each of these numbers are people – families with young children, young professionals – and their lives are being turned upside down. It is going to have a huge impact on the sort of city we live in.”
The research, based on an analysis of the existing right-to-buy scheme, says 5,423 social and affordable homes could be sold off in London every year as a result of the bill being passed, either from housing associations under the new right to buy, or from the forced sale of council properties. This would result in 21,692 fewer affordable properties in London by 2020.
Under the government plans, hundreds of millions of pounds of funding will be taken from London and spent in other parts of the UK each year.
Khan said the bill had been designed without any thought to the specific housing challenges facing London. He called on politicians from all parties – including the Conservative candidate for London mayor, Zac Goldsmith – to vote against the plans as they stand.
Goldsmith said the aim of this bill was right, “extending the possibility of home ownership to a million people”.
But he added: “The details matter and the bill needs amending to ensure it works for Londoners ... The bill must deliver a clear net increase in low cost housing for Londoners and I am working with colleagues to ensure it reflects that.”
This year it was revealed that thousands of poorer families have already left inner London in the past five years, creating “social cleansing on a vast scale” and leaving large parts of the capital as the preserve of the wealthy.
But Khan warned this trend would accelerate dramatically if the bill was passed. “There are things we can do to tackle the housing crisis in London and I will implement those on day one if I become mayor,” he said.
“But the first job is to defeat these proposals which, if they go through, will change this city, making it all but impossible for many families or young people to live here.”
Khan, if elected, plans to set up a homes for Londoners initiative, led by a team of housing and development experts in city hall, who would work with councils and private developers to speed up housebuilding across the capital, identifying public land for development, finding new sources of finance and speeding up the building process. They will use the mayor’s planning powers to ensure half of the homes in any new development are genuinely affordable, stop developers selling off new properties to investors before they are finished, and set up a not for profit London-wide letting agency that would reduce fees and offer tenants longer term lets.
A spokesman for the Department for Communities and Local Government said: “We want to help anyone who works hard and aspires to own their own home turn their dream into a reality. More homes were built in London as a result ofright to buy, with nearly 1,140 new starts and acquisitions made against 536 sold under the first year of the reinvigorated scheme. This shows councils are delivering on their commitment to provide one for one replacements within three years.”
‘House prices go up faster than we can save’
Michael Chillingworth, 31, and his partner Laura MacMillan, 32, live in a small rented flat in Golders Green, north London. They pay £1,000 a month in rent and are keen to move to somewhere bigger but say there is no way they can afford it, despite having a combined income of approximately £45,000.
“We are not able to save up a deposit because of what we pay in rent and the costs of living in London,” said Chillingworth. “We feel stuck. We are not able to afford anything bigger, either renting or buying. Ideally we would love to buy a place but there is just no way.”
He said it was difficult for them to imagine what their future would hold. “The kind of work I do means I can’t really leave London. Both our parents bought houses. By the time they were our age, they had owned a house for a long time, even though they probably earned less than us relatively. And that is sort of their pension. I don’t know what we are going to do when we are that age.”
He said their current flat was too small for two people, never mind if they wanted a family. “Every year that goes by and we still haven’t bought somewhere it seems more out of reach as house prices go up faster than we can save.”
Chillingworth added that the only friends who have managed to buy somewhere had a hand from wealthy parents. “We know a few people who have bought in London but they have been lucky enough to have a large contribution from their parents ... No one in our situation – even in good jobs – has a hope of getting on the housing ladder.”
At the Tory party conference this month David Cameron unveiled a new plan for developers to build affordable homes for sale rather then rent priced at £450,000 in London. Chillingworth said that was the final insult. “On what planet is that described as an affordable house? £450,000? It just rubs salt in the wounds.”