Response to Mayor’s draft housing strategy from LSE London

December 2017 

This response draws on discussion at an academic and policy round table held at LSE on 13 November 2017, with attendees from LSE and from other academic institutions and research centres with a London focus. The views expressed do not necessarily reflect the opinions of all participants.

The general approach

The draft contains many sensible and commendable policies. However inevitably it reflects a series of political constraints as well as the limitations that the Mayor faces given that most of the powers and responsibilities over housing lie with central government or local authorities. Equally in some cases where the Mayor might have real influence a political decision has been made not to exert it: for example, the issue of using Green Belt land and reviewing its boundaries. Within London and in the wider South East, the three tiers of government need to find ways to work together cooperatively and proactively to address housing.

The document contains a very large number of goals, tools and policies but it is not always clear what effect(s) each policy is intended to produce or how the policies are expected to interact with each other, let alone with the wider policy framework. This is particularly important because the draft strategy is somewhat more prescriptive than its predecessors, so those who must implement it need to understand not just the aspirations but the conditions necessary for goals to be achieved. The strategy would be improved if there were an explicit theory of change that demonstrated how, why and when these policies would contribute to the required additional housing numbers and changes in affordability. Linked to the above, the document would benefit from clearer prioritisation. With so many goals and tools, which will officers and the Mayor focus on?

In assessing the potential success of the strategy, one core issue much discussed at the LSE event is the scale of additional housing that it is intended to deliver during the period of the strategy. While housing output increased rapidly in 2016/17, the Mayor’s aspirational housing targets can only be achieved if these numbers are further boosted, then the new higher total delivered year after year for decades. We are concerned that there is a danger of disappointed expectations if targets are raised beyond real potential.

Clearly this topic will be discussed in much greater detail in relation to the draft London Plan, but it would be valuable for the GLA to set out in some detail their understanding of which factors are expected to make what differences to the future rate of production as compared with the average of the past fifteen years (as the baseline for their population forecasts).

Some drivers of increased housing production lie outside the draft housing plan. A major component of the 2016/17 expansion was conversions–of offices or retail to housing, or conversion of existing housing into more than one unit. These conversions arise from national policies or from the pressure of demand, and are hardly affected by the policies discussed in the Draft Plan. Equally Help to Buy is now starting to have an impact on completion rates but is currently only available to 2021.

Specific Issues

Land Market

We welcome the Mayor’s intention to intervene more actively in the land market, as identification of suitable plots and land assembly are often the most risky and time-consuming parts of the development process. Equally we welcome the strong focus on the use of public-sector land for provision of housing, and especially of affordable housing, as long as environmental, accessibility and amenity issues are properly addressed. However, experience in London suggests it can be far more difficult to bring public land forward than private. The Mayor controls the disposal of the GLA’s own land within the rules specified by national government, but cannot direct other public-sector landowners. Even so, it is appropriate for the document to make more explicit the Mayor’s expectations of other public landowners (in particular the boroughs) in terms of using their land for housing, not just with respect to the proportion of affordable homes to be provided—especially as the requirement for a higher proportion of affordable homes on public land is likely to act as a disincentive to public owners to release land for residential use.

Green Belt

One core issue the document avoids is the sacrosanct status of the London Green Belt in the context of housing provision (even though development for other public purposes is regularly accepted). This is a major missed opportunity to argue for limited, selective intervention in the Green Belt, notably in conjunction with major infrastructure provision. It would make the case for asking authorities in the wider South East to accommodate some overspill much easier to make. And it would enable a more rational and efficient use of costly transport infrastructure and could permit truly visionary world-class schemes. In addition, it would be appropriate for the GLA positively to encourage both public authorities and private owners and developers to improve the environmental amenity value and access to green land.

Density

As is clear from the now published draft London Plan, long-term success in addressing London’s housing need is perceived to depend on increasing density, especially in the outer suburbs. This raises a number of issues. First as noted in our report to the GLA, increased planning densities have not in the past led to increased housing output but rather to less land being used. Second, the definition of accessibility depends on access to a public transport location but takes no account of congestion levels arising in part from large-scale dense developments – so it is not a simple issue but must be linked to transportation (and service) infrastructure provision. Third, there is often an assumption that higher density and high rise are fundamentally the same thing, but in fact there is very little connection. Finally planning density and actual occupancy levels may bear little relationship, especially in smaller units. All these factors suggest that there is a need to monitor rather than assume outcomes. In addition, while higher density should be facilitated it should not be at the expense of living space and good design: new housing in London is already some of the smallest in the developed world.

Affordable Housing

A further issue is the policy with respect to affordable housing. We are happy to note that the currently identified proportion of 35% is not to be seen strictly as a target but as a threshold which will ensure that developments are fast tracked. We also note that the Mayor accepts that the longer term strategic target cannot be met simply by planning requirements – even if these could be applied across the board – but rather must involve large-scale subsidy either from government or in the form of cross-subsidy by social providers. Again, there is a strong case for detailed monitoring and analysis of what is actually occurring, and examination of the costs and benefits of the market response to these increased requirements. Of relevance here is the role of permitted development which may add to the stock of housing in total but involves no affordable housing provision.

Diversifying the Housebuilding Industry

We welcome the emphasis on diversifying the housebuilding industry while noting that to date much of the apparent diversification involves the same organisations and resources in slightly different guises. One of the primary reasons for the loss of small developers has been the complexity, risk and cost of negotiating the planning process and simultaneously obtaining finance. Large developers have entire specialised departments that handle these tasks. There is little clarity about whether small sites should perforce go to small builders and a surprising lack of emphasis on trying to ensure that small and medium sized builders become larger and more robust. Small builders face clear difficulties not just in negotiating the planning process but in accessing public land and the Mayor can help reduce barriers in these areas.

Alternative Forms of Provision

We commend the support for alternative forms of provision, including both social and technological innovations. Social alternatives include cohousing, intergenerational housing and other types of collaborative approaches. These schemes can serve as testbeds for new approaches that have the potential to be scaled up. Inevitably some will fail, but those that succeed can produce lessons that belie their small size, contributing to better housing options for Londoners in future.

Off-site Manufacturing

Technological innovations such as such as off-site manufacturing (also known as modular housing) can in principle contribute to speeding up delivery by bringing in more replicable skills and resources to help overcome some bottlenecks in the construction process. Evidence from our project on Accelerating Housing Development suggests that smaller builders could benefit as much as large developers, and that the techniques are particularly suitable for more effective use of ‘meanwhile’ sites. But the industry is still a long way from standardisation and many developers report bad experiences, so a step change in use of modular methods may require far greater co-operation among stakeholders. The Mayor is in a good position to champion these methods and identify barriers to wider take-up.

Private Renting

Regarding private renting, the Mayor is right to say most landlords are providing a good service to their tenants, and evidence suggests they are not making high returns on current values. Indeed, this in itself is beginning to threaten the growth of Build to Rent investment in London except perhaps in the context of permitted development. Yet this is clearly a model which should work for London and Londoners, both because purpose-built rental housing can be built more rapidly than for-sale homes, and because it provides accommodation suitable for urban living. As we have noted elsewhere (see here), we see a strong case for using a version of this model to provide specifically for younger working households who are necessary for the health and wellbeing of the capital.

While recognising that the Mayor has no direct powers over private tenancy contracts, we agree that there is a strong case for introducing longer term – we would argue indefinite – security of tenure for most leases. The forthcoming implementation of the new Scottish tenancy law will provide useful lessons and should be closely monitored.

Overall, we welcome the aspirations laid out in the Mayor’s Housing Strategy but feel that there is a relative overemphasis on specifying policy changes (which often bring with them costs as well as benefits) rather than on clarifying their relative potential and what they might be expected to achieve and then ensuring that there is an integrated approach to overcoming identified barriers.