I beg to move,
That this House has considered affordable housing in London.
It is an honour to serve under your chairmanship, Sir David.
First, I should draw attention to my entry in the Register of Members’ Financial Interests as the owner of a rental property and a member of the Residential Landlords Association.
To say there is a housing crisis in London has become a cliché, but it is more than that for our constituents who want to be able to stay in London and to afford a roof over their heads. Affordability is defined by what is affordable to people who live in London, or want to live in London. Living in London should not be seen as some sort of privilege. Not only should our constituents have the right to live in London among their community and family support networks, but London needs people to keep our great city’s economy and public services going. I will show just how difficult that can be when teachers, nurses, daycare assistants, chefs, cleaners, baggage handlers and so on cannot afford to live in London.
First of all, I apologise, as I will not be able to be here for the whole of this timely debate. There is a particular problem in the housing market in the centre of London that has a knock-on effect in suburban areas. The hon. Lady refers to various jobs and how people feel squeezed out of the London market, but that also applies—dare I say it—even to those who would be regarded as incredibly well-paid City professionals. I hear from senior partners in law firms who say that junior lawyers on almost £100,000 a year simply cannot get on to the housing ladder without having a hell of a long commute, and often they work very long and untimely hours as well. As she rightly says, the problem affects all of us here in London. All of us MPs, of whatever political colour, feel strongly that we hopefully can make a contribution to ensure that the Government are aware of the particular problems we have in the capital city.
I thank the right hon. Gentleman for his intervention. Of course, in his constituency he has many people working at very high salaries. We know there is a crisis when people on almost £100,000 a year cannot afford a home in London.
The problem goes to the heart of London’s ability to function and to serve the rest of the UK. Let us look at the problem from the perspective of a few people who want to live and work in London and see what their choices are. In the teaching and social work professions, there is a chronic shortage and a recruitment and retention crisis, as all of us who have recently met headteachers or directors of social services know. Inner London salaries range between £27,000 and £37,000. If we take a mid-point of £32,000, someone could get a 25-year mortgage with a 5% interest rate and they would be able to afford between £87,000 and £131,000, but in my constituency a teacher could not get anything. The cheapest home for sale in my constituency, apart from a boat, is £190,000, and that is for a one-bedroom flat in a house that is in a shocking condition.
Is my hon. Friend aware that in the W4 postcode, which is in her constituency and mine, just to have a chance at having a one-bedroom flat—a so-called starter home under the new scheme designed to alleviate the crisis—someone would need a salary of £90,500? Starter homes have been misnamed. They are not starting anything, but ending dreams for a generation.
My hon. Friend is absolutely right; I will move on to that subject shortly. Certainly a salary of more than £90,000 is not the average mid-point for a teacher or social worker.
Time and again when I talk to employers, housing is the issue. For some nurses there has been some key worker housing, which was introduced to deal with market failure and to provide cheap housing, but that is all but disappearing. Those entering nursing will also face a mountain of student debt now that the Government have announced the scrapping of the NHS bursaries. The Royal College of Nursing survey recently showed that many nurses will leave London if they cannot afford anywhere to live, which will add to the problems in the NHS.
At the lower end of the pay scales are people who are essential for London to work. A daycare assistant is paid £6.70 an hour to work in a nursery here in London; that is about £1,000 a month. No one with a family can do such work when the average rent is around £1,500 a month. Even renting a room takes well over half the daycare assistant’s take-home pay. I have a specific example of a hard-working man and his family in my constituency. Since coming to London he has worked full time in two jobs. He has rented privately for years, taking multiple loans to cover deposits and rent up front, and is now in considerable debt as a result. His landlord has now raised the rent as it is the end of the tenancy, so he now cannot stay there with his family. Letting agents and private landlords will not accept claimants of housing benefit, which he needs to top up his rent, and he cannot borrow any more money for a deposit. Despite never missing a rent payment and despite two previous letting agents confirming that with good references, he cannot rent privately. He has had to apply to the council as homeless in order to get housing.
But my constituent will not get a council home. The current series of “How to Get a Council House” is filmed in my borough of Hounslow. None of the families in that series has ended up getting a council home. If they have been lucky and got through the hoops, and if they have been accepted under the council’s duty to house, they are placed in temporary accommodation, as my constituent and his family will be. Temporary accommodation is private rented housing where housing benefit may contribute to housing costs, but even then my constituent is not out of the cycle of escalating rents. He may dream of owning a home—a Government objective—but what he needs is a home at a rent he can afford on his low wages.
He is not alone. The ending of a private tenancy now accounts for 39% of homelessness acceptances in London. According to the Department for Communities and Local Government statistics, 32,000 people in London made an application to their council as homeless in 2014-15, which represents an increase of 38% over five years. DCLG statistics reveal that right-to-buy sales between October and December 2015 accounted for 26% of sales. Right to buy is for people who are already fortunate to be council tenants, but, with a Government discount of up to £100,000, it is taking valuable stock away from local authorities, hence their dependence on temporary accommodation.
In the council housing sector, like-for-like replacement is not happening for the council homes bought under right to buy. The new replacement homes that the Government announced could be shared ownership or low cost sale rather than rent. At least 36% of all homes sold by councils across London are now let by private landlords, many of them subsidised by housing benefit because the rents are so high. The sale of high value vacant council homes will have the overall effect of restricting the number of affordable houses for rent. London Councils is concerned that the objective to replace two homes for every one sold may not be sufficient to cover construction costs and land purchases in the right mix of housing. So already we have examples of the failure of the housing market in London that is causing the affordability crisis.
I have not yet mentioned employees in the private sector on middle incomes. Fuller’s Brewery in my constituency is a thriving business with an international reputation. Having spoken to the directors, it has become evident that the housing crisis is affecting their business and their ability to recruit and retain staff. So who can truly afford to buy a home in the area they want to live in, grew up in or want to work in?
Leyton, which forms the bulk of my constituency, has traditionally been a relatively cheap place to buy, compared with the rest of London, but in recent years all the surveys—for example, by the Evening Standard and other newspapers—point to Leyton as one of the city’s property hotspots, which has meant that property prices and rents have gone through the roof. Does not that point to the fundamental problem: a lack of supply? The imbalance between demand and supply has reached the point where so many people, such as those whom my hon. Friend is discussing, can no longer afford to rent or buy in London.
My hon. Friend is absolutely right. So many people are moving away. Many are moving abroad to countries where their skills are valued and they have a much higher standard of living. Even a childcare assistant can earn £40,000 in the United Arab Emirates. It is, though, investors from middle east countries who are propping up London’s housing crisis. Many people are moving elsewhere in the UK as well, thus adding to London’s brain drain and skills drain.
Yesterday’s Evening Standard reported that young Londoners spend almost 60% of their salaries on rent. The first year group to leave university with more than £50,000 of debt, because they were the first group of students to have to pay £9,000 a year in tuition fees—my son among them—are now hitting the jobs market. How can someone save, pay off their student debt and afford to eat and keep warm with rents at current levels?
The hon. Lady is highlighting the personal misery of housing in London; would she also reflect on the fact that the housing shortage—there is no doubt that we have a major problem here in the capital—is beginning to put London’s international competitiveness as a business centre at risk? This side of a further referendum in Scotland even the Scottish National party would recognise that as a problem, because if London’s competitiveness suffers the whole United Kingdom will suffer. A recent London First survey said that some 73% of the London businesses surveyed said that housing supply and costs were a significant risk to the capital’s economy.
The right hon. Gentleman is absolutely right. Many business organisations are raising housing as an issue. Two years ago, the London Chamber of Commerce and Industry wrote a significant, ground- breaking report on housing costs and the housing shortage. That does not appear to have been taken into account when the Housing and Planning Bill was drafted. I understand that the LCCI will be launching another report in a couple of weeks to highlight the problems again.
A shortage of the total number of homes in all sectors—council, social rented, intermediate and market rented—has driven up open market sale and rental values. Several organisations, particularly the London Housing Commission, have estimated that London needs at least 50,000 new homes a year just to begin to deal with the shortage, and stated that a significant proportion must be affordable, particularly when wages have not kept up with prices. The average Londoner’s salary is £33,000, but the average home now costs 16 times that. As more people are priced out of home ownership, they are putting more pressure on the rental market, in which rents are continuing to rise. In my borough, Hounslow, the rent-to-salary ratio is 58%, and rent levels are out of reach for average earners, let alone those on low wages.
Until around five years ago, councils relied on Government support to add to the stock of council and housing association homes so that they could provide decent-quality, affordable homes to those in acknowledged housing need who were unable to rent or buy in the private sector. In 2011-12, some 12,000 new social rent homes were delivered, thanks to the Labour Government policies that supported housing associations, and later councils, to build, but that figure has been declining, and only around 2,000 new social rent homes will be built this year. That shows how the pipeline supply is declining. The number of council homes and housing association social rented homes built this year will be lower than the number of council homes lost through the right to buy. The total stock of homes for social rent is going ever downwards.
There was always the intermediate market of shared ownership—part rent, part buy—but less of that stock is now coming on stream as the Government focus on starter homes and Help to Buy. Relying on the private sector to deliver affordable homes has meant that in new developments across London, only 13% of homes given planning consent last year were considered “affordable” under the official definition. We are losing social rented homes faster through council house sales than section 106 agreements with developers are delivering new homes.
What are the Government doing about affordable housing? Let us look at their flagship policy: starter homes. When the policy comes on stream, it will apply only to brand-new properties, which, at current prices, are unaffordable to most working Londoners, as the right hon. Member for Cities of London and Westminster (Mark Field) said. Someone needs to be earning £97,000 to buy an average-priced starter home. Starter homes will also cut the delivery of all other homes. A third of councils that responded to an Inside Housing survey revealed that their entire affordable housing requirement could be consumed by starter homes if the threshold is set at 20%.
Charities such as Crisis are concerned that the policy will require councils to prioritise starter homes for higher earners and so reduce councils’ scope to meet the full range of housing requirements identified through their local planning processes. London Councils agrees that starter homes should be in addition to other forms of housing, so that councils can still secure the necessary tenure and price mix in accordance with the needs in their area, and can discharge their homelessness responsibilities by providing truly affordable housing.
My hon. Friend is being very generous in taking interventions. She mentioned her own experience as a parent; has she seen the Aviva research that shows that 1 million more people aged between 20 and 30 are going to be living at home with their parents in the next 10 years? We have all heard of the bank of mum and dad, but does she agree that the Government have not only messed up the housing market but seem to be stunting young people’s growth?
Young people whose parents live in a house in London big enough for them to have their own room, or even to share a room, at least have the advantage that they can ask us to carry on housing them—for I do not know how long—but what about mobility? How can young people from other parts of the UK or other parts of the world come to London? They do not have the landlord of mum and dad to turn to.
Let me return to the implications of Government policy and the Housing and Planning Act 2016. Many London councils, particularly those in inner London, believe that in future there could be areas where there are no affordable rented homes, because the Government expect 20% of all new developments to include starter homes on sale at 80% of market value. Couple that with the right to buy, the decline of housing association stock and the forced sale of vacant council homes, and there will be yet more of a crisis.
I counsel that we should not despair entirely. One of my local authorities, the City of London, owns property not only in the square mile but in places such as Southwark, Lewisham, Lambeth and Camden, and is looking to start its biggest house building programme for four decades, since the building of the Barbican centre. That will require being pragmatic about the mix—with some social housing and some at an intermediary level—but it is looking to build 3,700 properties over the next 10 years, which is quite a lot for such a small local authority. If we can work with local authorities to recognise not only the problems but that, because of the cost of land, we have to be a little more relaxed about density than we might have been in the past, there is potentially a route forward, with all local authorities working with the London Mayor and, of course, the Department.
I will move on to the London Mayor at the end of my speech. The City of London is in a slightly unusual situation: it has capital and other sources of income, and it can use its wealth to deliver affordable housing across London, as it used to do historically.
My council still has several hundred of the last council homes in the pipeline. Labour authorities generally, as well as the City of London, had a much higher propensity to deliver council housing until now, but the current Government policies make that more difficult. There is no specific Government-led initiative aimed at key workers, and the right to buy for housing association tenants is paid for by the sale of vacant council homes, which causes the social rented housing stock to decline further. Other Government policies, such as reducing the benefit cap, extending the right to buy with discounts of £100,000 and freezing local housing allowance rates, exacerbate London’s affordability challenge.
At the end of May, the Chancellor, who was standing in at Prime Minister’s Question Time, acknowledged to me that there is a problem. That is a start, but it is a shame the Government did not acknowledge the scale of the problem before drafting the Housing and Planning Bill. The Chancellor told me that he has met the new Mayor of London—our former colleague, Sadiq Khan—and that housing was top of the agenda. The new Mayor is committed to ensuring that 50% of all new housing in London is genuinely affordable. He has announced that he will introduce a new London living rent, which will be based on one third of average local wages, to tackle the skyrocketing private rental prices, but to do that he needs the Government’s active support.
The Government must acknowledge that there is a problem in London that the current initiatives will not address, and that merely increasing the supply of housing will not in itself provide the housing we need to attract teachers, nurses, social workers, cleaners and childcare workers. The London Mayor, local authorities and the Government will have to work together on new solutions. The Mayor is offering the use of non-operational Transport for London land, but we also need the land of other public bodies, such as the NHS, for key worker housing. We need to return to providing proper support for social rented housing that is truly affordable to working people at all stages of the salary range.
By acknowledging the scale of the problem and accepting their role in addressing it, the Government will make a start. They must accept that their policies are depleting the supply of affordable housing and that they are subsidising market distortions in flats to buy. They must allow local authorities to have the power to invest in new social rented housing, cut the discount on right to buy and release funding for key worker housing. That would be a start.
It is a pleasure to serve under your chairmanship, Sir David. I congratulate my hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury) on highlighting this hugely important issue. As she said, now is really the time. The Government, having passed legislation in this area, have recognised that it does not work for London. We have a huge opportunity now that we have a new London Mayor. Although I railed against the Housing and Planning Bill, we have to work with what we have and come up with a solution for London within the current framework; the Mayor should be given some latitude in how it is interpreted.
I want to talk about issues in my constituency that highlight the crisis, and I will touch on the work of the Public Accounts Committee in this area. I have often talked on the record about this issue, but every time I speak, the price of a house in Hackney has gone up. The average property price in Hackney is now £691,969, which is an 85% increase on 2010 prices, when properties cost only £373,000 and a bit. Average wage growth in London over the same period was 1%, so property prices in my borough are out of kilter with reality for every group. We are living in a real crisis.
Hackney is the 11th most deprived authority in the country. Interestingly, we have gone down from being top or second, where we were for many years, because the house prices mean that only the very richest can move in. That has increased the average salary in the borough to £33,000 a year. The variation is great. People often tell me that my constituency is achingly cool, but I remind them that it is also achingly poor—many people are on very low incomes and are struggling to get regular work. That is reflected in the fact that there are 11,000 people on the council’s housing register, which is frankly a bit of a joke. People think it is a waiting list, but given that 1,338 homes were allocated in 2014-15, the demand is certainly not being met through the available supply. In addition, Hackney Council could lose 700 homes through the forced sale of council homes to fund right to buy for housing association tenants. I really worry about where people on low incomes will be able to live in the future. In the private sector—I will speak more about this in a moment—the rent for a typical two-bedroom property is about £400 a week, which equates to just over £20,000 a year. To afford that, someone would need an annual gross household salary of approximately £59,000.
The stark reality for my constituents is that home ownership, renting and social housing are but dreams. Many of them are stuck living with their parents at home as adults. In my surgeries, I increasingly meet families that have people living in the living room, or parents and children living on the sofa—not even a sofa bed, because very often there is not space even for that. I say seriously to the Minister that I fear we are creating modern slums. I acknowledge that Governments over many years have not built enough homes, but now we have this wretched housing Act.
This is not new. Back in 2001, when I was a member of the London Assembly working with the then Mayor, Ken Livingstone—perhaps not so much working with him, as he was not in my party at the time—I produced a report and chaired a group on housing for key workers. We looked at nurses, bus drivers, teachers and police officers as a sub-section of that group, and concluded that there was a real crisis looming for middle management. As my hon. Friend the Member for Brentford and Isleworth highlighted clearly, that is sadly coming home to roost. I do not like to say that we were right then, but we were, and too little has been done since. As my hon. Friend said, that goes to the heart of London’s ability to function. We predicted that problem. We also had the concern that, as she highlighted, people on low incomes in the private sector are key workers, too: we need people to work in banks, to be chefs and to drive taxicabs. They need to be considered, too.
The solutions that the Government have come up with are key worker housing, shared ownership, starter homes, Help to Buy and, of course, the private sector, but they do not work for Hackney and the expensive parts of London and the south-east. Key worker housing is usually defined by profession, and it is typically for the public sector. That is fine if people can access it, but there are issues with it. For a start, there are not many key worker housing schemes around, and there is also an issue about rent levels.
Together with the right hon. Member for Cities of London and Westminster (Mark Field) and other colleagues, I fought hard to preserve some former Crown Estate properties as key worker housing. They are now owned by the Peabody Trust. I met Peabody last week, because many tenants in those properties have raised concerns about the unaffordability of rents, which have been set at 60% of market rent; that is Peabody’s definition of a rent that is achievable by key workers, but given the market rents in Hackney that I have set out, that is beyond the reach of nurses, social workers and teachers.
Even if that model is made to work, there is not enough of it. It is a very ill-defined part of the housing market. Peabody has, to a degree, acknowledged that there is a problem, and it is looking again at what the right rent should be. I am pleased to say that it will meet tenants and residents in July to start the debate about what the best model is for providing sustainable, solid and secure housing for the key people we need to keep London operating. I wish it well in its endeavours, and I hope to be involved. I am also seeking a meeting with the Mayor of London to see whether we can shape this debate at a London level.
Shared ownership is one of the other so-called solutions. In Hackney, we have seen the ludicrous situation of shared-ownership properties on the market for well over £1 million. The defence of the housing association concerned is that four sharers on £70,000 a year could buy a share of the property. That is not what I thought shared ownership was for. The rent levels on the remaining equity can be a real problem—it is sometimes as high as 4%—and there are issues of move-on for families who grow and need a larger property, but cannot afford to staircase up. One of the challenges is the narrow market, and the lack of mortgages available to people who are shared owners. That model is fast heading for bust; we need a rethink, and perhaps to use the money put into shared ownership for more sustainable forms of rented housing, or for better subsidies so that the right people can move into long-term affordable home ownership.
At Prime Minister’s questions, the Prime Minister told me that the solution to the problem in Hackney was starter homes. As my hon. Friends have highlighted, at about £400,000 for a starter home, who in my constituency can afford that? Hackney Council has estimated that a person would need an income of about £71,000 to buy a starter home in the borough, although my hon. Friend the Member for Brentford and Isleworth highlighted a figure of £97,000. There are different figures, so perhaps the Minister will clarify that point. What is the rate for a starter home in London? My constituents want to know that, because anyone who might be interested in a starter home wants to know whether it is possible to get one.
As for Help to Buy, I need say little about it, except that in my borough it has been fuelling house prices. Miraculously, newly built properties coming on to the market hit only a smidgen below the Help to Buy threshold. That initiative is not helping in areas such as mine. The private sector, too, is a real problem. In my constituency, more people now rent privately than own their own home. Private sector tenants who have been suddenly cast out and have nowhere to go are coming to my surgery at an unprecedented level.
Let me give an example. Only this Monday, a 68-year-old woman saw me at my surgery. She has lived at a property for 52 years, first with her grandmother and her uncle, who are now dead. The property, to use an old-fashioned description, was benevolent housing for the working poor when it was built towards the beginning of the previous century. It was, however, sold on, and the rent is now £382 a week. It is a three-bedroom property, so she has been told that her housing benefit entitlement is only £200 a week, because she is under-occupying, but bear in mind that it has been her home for 52 years. The woman’s income—she has a private pension and a bit of state pension—is £800 a month. She is a proud woman who has never claimed a penny until she had to claim housing benefit, and she is embarrassed about doing that. She is in a desperate state and is in rent arrears. I am working with the council to see if we can find a solution for her, but she is only one of many.
Another tenant, a younger woman of 46 years, works in one of our national museums, but she has been ill and unable to work. The rent was affordable, but the landlord decided to up sticks and move abroad; he contacted an agent, who said, “Hey, you’re not charging enough here, put the rent up,” which the landlord did. That put the tenant notionally into rent arrears, although her rent was enough for the landlord previously. Her ill health and her need for housing benefit mean that no agent is interested in looking at her. She managed to find one landlord who was willing to take her on, but that landlord would only accept her with some sort of rent guarantee, which the council, however, cannot offer on housing benefit before someone moves in, so the whole system is bust. She has looked not only in Hackney, but in the neighbouring five or six boroughs, and she can find nowhere affordable to live, even in the constituency of my hon. Friend the Member for Leyton and Wanstead (John Cryer). She is 46 years old, single and not working—temporarily—and she is unable to find anywhere to live. What is the solution for her? The Government are offering nothing at all, and they are even about to rip away from my constituency any social housing—if she could qualify for that, which, frankly, would be a miracle, even in her circumstances.
What are the solutions? The Public Accounts Committee has been looking into the matter intensely, on a cross- party basis. In September, we published a report on the Government’s land disposals programme. The programme was announced at the beginning of the previous Parliament by the Housing Minister at the time, the right hon. Member for Welwyn Hatfield (Grant Shapps), and was intended to dispose of enough land to build more than 100,000 homes—so far, so good. What we discovered, unbelievably, is that the Government cannot tell us how much the land was sold for, how many homes have been built on the land, and whether it was value for money for the taxpayer. The figures even included some land released in the early stages of the previous Labour Government, so the numbers were criticised by auditors.
Perhaps the Minister will respond to one of the Public Accounts Committee’s recommendations:
“In taking forward its new target”,
which the Government had announced,
“to release land for up to 150,000 homes between 2015 and 2020, the Department must only count the number of homes built, or commenced, on land disposed of during the programme. This should also include the number of affordable homes.”
We have been told by civil servants that Ministers expressly said that they did not want the homes built on land disposed of by the Government counted. Let me repeat that, because it sounds unbelievable and people might think that I have misspoken: Ministers have expressly said that they do not want to count the number of homes built on public land disposed of for house building. It is more Sir Humphrey than Sir Humphrey, and it is time that the Minister gave us an answer.
We also now have the right to buy for housing associations. I have no problem with people wanting to become homeowners. I am a homeowner myself; indeed—forgive me, Sir David, I forgot to mention my declaration in the Register of Members’ Financial Interests—I am a landlord in London, so I have no problem with people buying their own home, but not in a way that is taking homes away from other Londoners. That is the thing. The back-fill is coming from councils having to sell their important social housing. The Public Accounts Committee concluded that not only was there no maths done on the right to buy, but it was not sustainable in its current form, with so little detail about how it will work. This is an opportunity for the Minister to work with the Mayor of London to make the policy work better for London.
There is also pay to stay. I have highlighted the multiple households in my constituency in which there are adult children who cannot move anywhere. They are stuck at home with their parents, and are often overcrowded; even if they are not, they are pushing the rent levels up, because as a household, their marginal taxation rate can be immense. I spoke to Peabody the other day, and it has had examples of people who have been reluctant to take on promotions, because households that go over a certain level of income—a £40,000 household income sounds like a lot outside London, but it is not a great deal in London—are suddenly having to pay a high marginal rate of both income tax, potentially, and extra rent.
I must also rail against the loss of secure tenancies. A stable home is a fundamental political principle for me. It is a building block for life, because with a stable home people can think about a job, getting their family sorted, making progress and contributing to the community and society in which they live. Without that, people are living in anxiety. In my constituency surgeries, I am seeing some of the worst housing cases that I have ever seen, and I have been elected for 22 years now. For the record, as we are in the middle of debate about the referendum, I have never once, in my 11 years as an MP, had an eastern European come to me about council housing—they all seem to live in the private rented sector, and certainly they have never come to me asking for council housing.
The Government are seriously damaging our city, but they have an opportunity. I ask the Minister to tell us, seriously, how much he will work with the Mayor. I also have a couple of suggestions, including giving back to the Mayor the land that NHS Property Services took away from London, such as St Leonard’s hospital in Shoreditch. The Mayor should be allowed to turn that land into homes, and to count how many homes he can build in total, and how many are affordable or for key workers. That will do more for our city. There might be a deal struck, so that some of the money goes back to the NHS—goodness knows, the NHS budget is under great stress—but those homes would be vital for our health workers, teachers and so many others.
The Mayor should be allowed to develop a solution for London. I hope that constructive discussions with the Mayor of London are ongoing, both behind the scenes and, soon, more openly, because if the situation continues, our city will be hollowed out and people will not be able to afford to live and work here, which will change the nature of our great London.
It is a pleasure to serve under your chairmanship, Sir David. I apologise to you and to the Front Benchers, because I have to leave before the end of the debate. Notwithstanding that, I wanted to take part, because the issue is important to my constituents; that, indeed, is why we have debates on affordable housing in London regularly.
I thank my neighbour and hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury) for introducing the debate and for setting out the problems so clearly. I also thank the right hon. Member for Cities of London and Westminster (Mark Field), although he has gone now, for turning up. He always turns up for these debates, and he is usually the only Tory London MP who does. Perhaps it is not surprising that five of the MPs who turned up represent central-west London constituencies, because although the problem is London-wide, it is particularly intense in those areas of high property values.
To illustrate that, in Hammersmith and Fulham, 58% of average monthly salary is now taken up by private sector rent, and the multiple of annual income represented by house prices—now pushing up towards £1 million, on average—is 20.5, the fourth highest in London. That shows how stark the problems are. That means that, for many people, social housing—council and housing association housing—is the only affordable type of housing. We obviously need a comprehensive solution that includes other forms of subsidised housing, whether those are traditional methods such as shared ownership or newer methods such as controlled rents and discounted sale.
There are a variety of schemes; it is simply that in recent years they have not been implemented. As my hon. Friend the Member for Brentford and Isleworth mentioned, the previous Mayor’s record was appalling, to the extent that the last year of his reign for which figures are available was the worst for affordable home delivery since records began 25 years ago, with fewer than 5,000 homes built. As she said, his record was about 13%, which simply makes a bad situation worse.
To give an example of what is going wrong and the opportunity cost—I mean that literally—there are more than 30 opportunity areas in London, and three of the biggest are in my geographically rather small constituency. We are told that, over a number of years, those three together will probably provide 40,000 homes. The failure in each of those areas is stark. On the one hand, we have the White City area, where the target for affordable housing was reduced by the previous Conservative council from 40% to 15%—and it is barely hitting that—which is encouraging high-value developers such as St James into the area. Many small penthouse and two-bedroom flats on the BBC television centre site, for example, are going for millions of pounds in what is the poorest part of my constituency and the area with the greatest housing need.
Worse still is what is happening in west Kensington and Earl’s Court, where permission was granted for 8,000 homes, which include not one additional social rented home and only 10% of any type of affordability. Effectively, those 23 acres of prime land owned by Hammersmith Council were given away. Notionally the cost was £90 million, but in practice once the council had the responsibility of buying out freeholders and leaseholders on that site, it was little if anything—it may even be a negative sum. That is beyond negligence. The whole of that site—some 80 acres—is public land owned either by the council or by Transport for London. The new Mayor will obviously take a strong interest in that, because although half of that land has already been disposed of, half of it—the Lillie Bridge depot—remains to be dealt with. Perhaps we can hope for something better, but again that shows the missed opportunity.
Most significant of all is the area that is now the Old Oak and Park Royal Development Corporation, which is zoned to provide more than 25,000 new homes. Again, that has been earmarked as one of the key areas for starter homes—in other words, homes that will go for up to £450,000 each, which are not affordable by anyone’s definition of the term. I fear for what will happen in that development because of the combined mismanagement of the previous Mayor and the Transport Secretary, who at the end of 2014 discovered that the construction of HS2, Crossrail and other rail projects in that area was being done in such a way that, as Sir Terry Farrell pointed out, it has prevented the decking of that site so that homes could be built above that work. Therefore, unless the new Mayor can work miracles, the prospect of building thousands of homes on that site has been lost for at least a generation, and perhaps permanently. What appallingly short-sighted planning, and that lies firmly at the door of the previous Mayor of London and the Government combined.
That is not good news. What is good news is that we now have a Mayor who has pledged to do his best to build not the 25,000 homes in London that we have seen, but the 50,000-plus that we need, and half of those will be genuinely affordable. I wish him luck. I will do everything I can, as will my local authority, to ensure that that happens, but it must be said that that is against a background of a Government doing everything through legislation to prevent people from having a secure, affordable home.
The vindictiveness of policies that enforce the sale of housing association properties by means of the subsidy from the sale of high-value council properties beggars belief. Boroughs like mine will be most affected, with up to 50% of council properties having to be sold over time. Why do we want to create insecurity for people in housing? That has all sorts of detrimental effects on people’s lives, and not just on their housing conditions, but on their health, the education of their children and so on. We have pay to stay; we have benefit cuts that are forcing people out of London; we have short-term tenancies, so people can no longer feel secure in their family homes; and, as Crisis said in its briefing for the debate, we have had a doubling of street homelessness since the coalition Government came in. It is now commonplace to use the term “social cleansing” to describe what is happening in my constituency. That is not an exaggeration, and it is no longer an emotive term but practical Government policy.
Yesterday I went to the funeral of a woman called Kathy Dolan whom I have known for many years. For many years beyond that, as tenants’ leader, she effectively ran the small, very nice Wood Lane estate, just next to the BBC television centre and opposite White City station. She made sure that people on that estate lived comfortable lives—she sorted out their problems and she dealt with the council—but in recent years she also had to fight developers. At mass yesterday, the priest was able to talk about the threat to established communities from developers. What an indictment.
We have strong communities in Hammersmith, as I am sure colleagues do around London, and we have many people who, like Kathy, work incredibly hard for no money and little recognition to sort out problems. They do not need the additional burden of vulture-like developers who have their eyes on their homes and want to make profit out of them, assisted by politicians who should know better.
Yes, there is a crisis in London housing. It can be resolved, but it requires us all to work together in the same direction to ensure that the people who work and live in London and have done for many generations can continue to do so. I am afraid that the policies the Government are pursuing are doing exactly the opposite.
It is a pleasure to contribute to the debate under your chairmanship, Sir David. It has the whiff of groundhog day about it as we regularly meet to discuss aspects of London’s housing crisis, but it is important to do so, and I very much congratulate my hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury) on securing the debate. The truth of the matter is that this is not a static situation. Things are getting worse, so it is important that we review the changing and worsening impact of London’s housing crisis and continue both to support the new Mayor of London—as everyone from the Labour side who has contributed to the debate has done—and to press the Government for a review of the policies that are likely to exacerbate an already critical situation and try to get some support for measures to respond.
Why are things getting worse? As we have already heard, the truth is that the escalation of London house prices, driven in large part by the failure of supply, is worsening housing inequality and therefore general inequality in the city to a catastrophic degree. My hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) quoted a figure for rising house prices since the economic crash, but I think her figures may be slightly out of date as those I have seen today show that London house prices have risen by 91.6% since 2008-09. I do not have immediately to hand information on what London wages have done since then, but I can say that certainly at the lower end of the spectrum they have had a tendency to fall rather than rise. Therefore, despite the fact that the party in government has always traded as the party of home ownership, home ownership has actually been priced out of the reach of hundreds of thousands, if not millions, of people, particularly in London.
There has also been continuing pressure on support for people who need assistance to rent their homes; in the private sector alone 250,000 London children are growing up in families who need assistance to pay their rent. That squeeze on housing support is continuing and deepening, and there are further reductions to come in the local housing allowance, which will also exacerbate the situation. Of course, as my hon. Friends have said, the Housing and Planning Act 2016 will have an impact.
On the point about the LHA, I welcome the Government’s review. I hope it goes the right way and we realise the impact of the cap on supported housing. Does the hon. Lady recognise, not least in relation to Westminster, the impact on places such as Enfield of the pressure on temporary accommodation, and placements of vulnerable children with many needs? There is a need for a better, strategic way of handling such relocations. Property prices are cheaper in Enfield than they are, perhaps, in inner London. Placements of needy, vulnerable children are having an impact on outer London boroughs and there needs to be a better way of handling that across London.
I absolutely agree with the hon. Gentleman, although I am slightly baffled by the implications of his critiquing the policy of his party’s Government. I hope that the Minister is listening, because the hon. Gentleman is right.
The Housing and Planning Act 2016 will make the situation worse through reducing the stock of housing to rent; the extension of the right to buy to housing associations; the forced sale of so-called higher value properties in the social rented stock; the replacement, through planning changes, of the scope for negotiation of homes for rent in new developments with the starter homes policies; and the implications of pay to stay and fixed-term tenancies. We had many opportunities to discuss the measures and our concerns fell on deaf ears, but they are a poisonous cocktail and will only intensify London’s housing crisis.
Is my hon. Friend aware that in Brent the rent for an average two-bedroom property is £21,500 a year? If the rent for affordable homes was 80% of that, that would be £17,222 a year, when the national minimum wage brings in £13,852. The maths simply do not stack up for people living at the bottom of the scale in London.
My hon. Friend is absolutely correct. The result of all the different pressures together, with worse to come, has an impact beyond housing, strictly defined; it is changing the face of London, intensifying housing inequality, and changing the face of poverty and low incomes in London. The typical family in poverty is now, for the first time in modern times, a working family living in the private rented sector in outer London—that takes me back to the point that the hon. Member for Enfield, Southgate (Mr Burrowes) raised. Poverty is being suburbanised and intensified by what is happening in the private rented sector.
All that is bad for London’s economy. There is ample testimony from London First, the CBI and many other organisations that the housing crisis is making it hard to recruit, and is undermining the effectiveness of London’s economy. It is making it hard to recruit and retain staff in the services on which we all depend. However, it is also undermining London’s civic life—the health and wellbeing of the city—as people struggle to cope with the consequences of the housing crisis. Above all, it is bad for individuals—for struggling families and for young people seeking to find a stable home of their own in which to build a life and family.
Inner London is on the front line, because it has the steepest house prices, broadly speaking. How are inner London boroughs such as Westminster coping with that? Very badly indeed, I am sorry to say. Westminster produced just 46 new affordable homes last year. Over the past three years a mere 12% of all the development in Westminster has been affordable. That is less than half of the already appalling 28% London-wide average. That is the pattern across London. Areas with the greatest housing pressures have the worst supply of new affordable homes.
In the weeks before the London mayoralty election—it is no accident or coincidence—a number of new developments were pushed ahead for approval by Westminster City Council. The Whiteleys scheme in Bayswater has 103 luxury flats, just 2% of which are affordable. Paddington Green has 690 flats, 19% of which are affordable. There are other schemes in the pipeline. Westminster City Council is closing and demolishing the Jubilee sports centre—the Prime Place development—and the developer is marketing its properties in the far east before a single one has been built. In fact, it was marketing in the far east before the closure of the sports centre. Figures out this week show that there has been a 9% rise in the number of London properties owned by offshore companies. It is not simply that we are failing to build—although we are—but we are building the wrong properties, in a way that is part of a process of purchasing from overseas by the super-rich.
Developers are private companies and will behave as the Government permit them to do, and as they are driven to do by commercial logic, unless they are encouraged to do something different. They have been going into the luxury housing market. I was struck yesterday by the marketing brochure of the Galliard company:
“In order to keep up with the trend of trophy apartments and to give buyers what they want, developers are creating properties that offer nothing but luxury and indulgence. In fact, Kay & Co have released statistics that show that ‘35% of units under construction or completed in 2014 are in 5* developments.’”
It adds that according to
“Knight Frank’s Global Development Report from 2015, the amount of prime luxury properties…in London”
is up threefold since 2009. So we are building luxury properties, in some of which—such as the Vauxhall Tower—hardly anyone lives. We are building luxury properties that are a sponge for global money and the super-rich; and a not insignificant proportion of that money is dirty money.
Is my hon. Friend aware that in many new developments in central London, the flats—because overwhelmingly they are flats—are not even being advertised in Britain? I do not mean that in a nationalistic sense, but they are being advertised only in areas of the world where there are large concentrations of wealth and power. Does she think we are storing up an awful lot of social and economic problems for future years, if the trend continues?
I am sure my hon. Friend has found in her constituency as I have in my borough that often properties are built and whole blocks are sold over a weekend in Dubai, Hong Kong or such places. Those are not homes for local people. Does she have a comment on that?
That is absolutely right. It is the well-documented phenomenon of lights-out London. It happens particularly in the wealthiest parts of London, but also with some of those blocks my hon. Friend has mentioned, which are marketed as if they are in the heart of Knightsbridge but are not; properties are being bought up overseas and at the very best used for short-term lets or high-value student accommodation. They certainly do not provide homes. Of course, the consequence, to go back to the intervention by the hon. Member for Enfield, Southgate, is that London boroughs, and particularly those in inner and west London, cannot meet the demand from the people in the greatest need; so homelessness and housing pressures spill over from those boroughs. As it is, it costs Westminster taxpayers £4 million a year to meet the costs of homelessness that are not covered by other Government costs.
We are placing homeless households from Westminster in Enfield, Barking and Dagenham and Newham. Westminster City Council says that it would like to build permanent homes in outer London. I do not know what outer London thinks of that, because in outer London boroughs such as Hounslow and Sutton, homelessness is rising very sharply. I do not see why inner London boroughs should be allowed to get away with that. As the hon. Member for Enfield, Southgate said, those households are being placed far from their support networks, which puts additional pressure on services in the host boroughs.
A shortage of school places is just one example of such pressure. The latest figures show that Westminster has 1,200 unfilled school places, and yet we are exporting our homeless households all over. Meanwhile, in an outer London borough such as Redbridge, which is a receiving borough but also an exporting borough, there is a phenomenal situation, with pressures being dropped there and people having to be placed elsewhere. Only two weeks ago, Redbridge Council revealed that it was going to purchase an ex-barracks in Canterbury in order to place its homeless there, much to the chagrin of Canterbury City Council, which had been negotiating to get the property for itself. This is lunacy, and it is all consequential upon wider problems.
Meanwhile, some get lucky, and some will get luckier as a result of the Government’s Housing and Planning Act. The starter homes policy will be a windfall for households who have the bank of mum and dad and are on joint or single incomes of £80,000 or £90,000. Those people will be able to enjoy the benefits of the discount on a starter home, carry that forward and cash it in. Even Westminster City Council, which is not known for its caution on such things, warned the Government that the potential windfall of tax-free capital gain is “very considerable” and
“wholly to the benefit of a first-time buyer”.
Good luck to them, if that is what the Government want to do, but bad luck to everyone else who either cannot afford that or finds they are at the sharp end of the housing crisis.
Some of the people who have been in my surgery in the past few weeks will not be the beneficiaries or be able to afford a starter home, even though they would love to have one. They include the pensioner I met last week, who has been in his privately rented home for 27 years and whose rent has gone up from £750 a month in 2014 to £2,500 now. Many other individuals are in that kind of crisis.
The Minister needs to address that. He needs to make it absolutely clear that he understands the impact of the crisis and will get behind the Mayor in the measures he intends to take to provide a range of affordable homes across all tenures. The Minister needs to work with other Departments to ensure that the pressures that brought about this crisis in London are resolved, for the sake of our city’s health and for the many people who depend upon a decent affordable home.
It is a pleasure to follow such a comprehensive commentary on London housing policy. The critique from the hon. Member for Westminster North (Ms Buck) was well put together.
The long-term failure of successive Governments to address the underlying problems in the housing market is undoubtedly more evident in London than elsewhere in the UK. I agree with Members that certain aspects are unique to London, but for the most part this city is just the epicentre of problems affecting the whole UK to a greater or lesser extent. The crisis here in London reverberates to the other nations and regions of the UK.
I warmly congratulate the hon. Member for Brentford and Isleworth (Ruth Cadbury) on securing this debate on a set of issues that have an acute impact on her constituents. I assure her that there is a shared interest in addressing the problems in London, because they affect all of us. Every time the Library updates its briefings on London’s housing crisis, the statistics get more and more shocking. It is clear from today’s debate that the key structural issues are not new. There is a chronic under-supply of new homes, an absolute shortage of property in London and—just as problematic—an ever widening gulf between earnings and house prices, which is the affordability problem that has been the focus this morning. Add to the mix a private rental sector that is out of control and we have a recipe for the housing crisis currently faced by the people who live and work in this city.
Like other MPs whose constituencies are many miles from here, I am not a disinterested observer. I have to live in London for more than half the week during parliamentary Sessions, so I have first-hand experience of London’s housing and rental market, although I am aware that MPs have a much easier time than most prospective tenants. I have repeatedly seen the problems faced by staff members and others who live here permanently, and I recognise the issues that colleagues have highlighted today that affect their constituents. Those issues all relate to affordability. They include short-term and insecure lets, but also landlords who do not fix things, deposits that do not get returned for months after a tenancy ends, if at all—in spite of the deposit protection scheme that is supposed to stop that—people having to sleep on their friends’ sofas and floors and, above all, soaring rents. Every year, or every time a rent has to be renegotiated, the rent goes up.
Of course wages—certainly those in the public sector—have stayed static for some years now, and in many cases they have fallen in real terms. There is an ever greater squeeze on the incomes of tenants, who are left in a difficult position, having to work out whether the costs and hassles of moving and the extra commuting costs outweigh the disadvantages of staying put. That causes people enormous stress, upheaval and insecurity and it destabilises communities. As other Members have mentioned, it puts untold pressures on families with children. We have not got anywhere near measuring the cost of uprooting children in terms of their future prospects.
It goes without saying that many private sector tenants have no medium-term prospect of their owning a home anywhere near where they work, and even having a stable home is challenging for them. Even people in London with well-paid jobs—those with well above average wages and, as we have heard today, some of the City’s highest-paid professionals—find themselves in the invidious position of spending so much of their take-home pay on exorbitant private sector rents that saving for a deposit at the level now required is all but impossible. People have to eat, too. The cost of living is already high in this city, regardless of housing costs.
If the average home in London now costs more than half a million pounds—16 times the average London salary—what hope is there for young people trying to get on the housing ladder, many of whom are already carrying a mortgage in student debt? In what universe is that achievable or even desirable? Who wants to be saddled with a debt of that level in the current climate of economic uncertainty? Every time the Chancellor stands up in the Chamber, he talks about bringing down the debt. I am not the first to observe that meeting his own debt reduction targets is something that he has conspicuously failed to do. The levels of personal debt that individuals now need to carry in order to own a home or even buy a starter home, not only in London but in other hotspot areas too, are frankly crippling and completely unsustainable.
The Government’s obsession with home ownership is undermining the affordable rented sector, where, in my view, there is tremendous progress to be made in London for anyone willing to make the tough policy decisions. Points were well made earlier by the hon. Members for Hackney South and Shoreditch (Meg Hillier) and for Hammersmith (Andy Slaughter) about the use of public land and the need to measure the outcomes of house building programmes.
In the 2015 Queen’s Speech, the Government confirmed that they plan to force councils to sell off their low-rent homes in high-value areas, mostly as a means of financing the extension of the right to buy to housing association tenants, and—in theory at least—to incentivise councils to build more homes. However, doing that will not achieve either of those things. Its main outcome will simply be to reduce the number of homes for social rent in areas where low-cost housing is most needed and to force those on lower and average incomes to move further away from the communities where they live and work.
We have seen in the past that selling off social housing stock cheaply has long-term adverse consequences. The big sell-off in the ’80s and ’90s meant that councils all but stopped building new homes. It made no sense whatsoever to use public money to build new homes and then practically give them away. It has meant that now, right across the UK, there is a chronic shortage of homes for social rent for those on low incomes—those in low-paid jobs, those on zero-hours contracts and those whose ability to work is impaired by health problems. Some of those people will never be eligible for mortgages and will always need affordable homes to rent.
One of the great ironies is that, 20 to 30 years on, many of the same properties that were bought by tenants are once again properties for rent, but this time in the private sector, being let for market-level rents, often to people who would be eligible for social housing, if any was available. As a consequence, we have seen soaring costs for local housing allowance and its predecessor benefit over the last two decades, disproportionately concentrated in London and the south-east, driven by a private rental market that is simply out of control.
As numerous Members have pointed out, the people who have been most badly let down by all this are the younger generation. Even those with good jobs, who have worked hard for qualifications, have no realistic prospect of buying a home in which they can raise a family. We see adults living with their parents, not just through their 20s but well into their mid-30s, desperately trying to save. We see young couples moving so far out of London in order to put a roof over their children’s heads that they severely compromise their family life by enduring hours of commuting each day.
I am delighted that the hon. Lady has talked about the plight of young people in London, but does she realise that this is not just about young people? A constituent who had been living in the same property for 14 years came to me recently, having received a section 21 notice. At the age of 72, he and his disabled wife have not been accepted by the council and are sofa-surfing with friends who live in my constituency. It is not just young people but the elderly who are suffering because they are not accepted as priority-need homeless.
The hon. Gentleman makes a very important point. Frankly, what people are being put through in this day and age is quite disgusting.
The situation we have created is not good for people, for families, for people’s employers or for communities. It is not good for anyone and is completely unsustainable. The UK Government’s current direction of travel risks compounding the mistakes of the past, fuelling house price and rent increases, and failing to deal with the underlying lack of supply on anything like the scale required. All the fancy help-to-buy schemes in the world will only fuel personal debt, drive house prices higher and continue to inflate rents unless we actually build more homes to meet demand and take action to ensure that we have an affordable housing stock for people on normal salaries.
It is a pleasure to serve under your chairmanship, Sir David. I thank my hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury) for securing this debate and for her vivid description of the challenges facing London. Those descriptions were mirrored by what was said by Members from all across London—by my hon. Friends the Members for Hammersmith (Andy Slaughter), for Westminster North (Ms Buck), for Leyton and Wanstead (John Cryer), for Hackney South and Shoreditch (Meg Hillier) and for Brent North (Barry Gardiner)—and by what was said about outer-London areas such as Enfield, which the hon. Member for Enfield, Southgate (Mr Burrowes) mentioned.
I am an outer-London MP and I am contacted by constituents day in, day out about the housing crisis in our city—whether that is by parents with children in their 30s who are still living at home or by young families in their third private rented flat in three years. Just recently I was contacted by an older man who had worked all his life but, because of a marriage break-up, is now living in one room in a shared house without even a kitchen to call his own. Rents are skyrocketing, with demand outstripping supply in every section of the housing market. Some local authorities have started doing ambitious, innovative work, but most councils are stretched. One council in my area, Bexley, is often in the position of trying to rent or buy accommodation for homeless families but being it is being outbid by buy-to-let landlords—sometimes the very same ones who caused the homelessness in the first place.
Alongside that, many Londoners’ dream of owning their own home is fading fast. We have heard about house prices increasing enormously across London. Crossrail is about to come to Abbey Wood in my constituency. It will regenerate the whole area, but that also means that people from Abbey Wood can no longer afford to live in the place where they and their parents have lived all their lives. Many Londoners therefore find themselves in the private rented sector, where the average rent is twice the national average for all property sizes, and the gap continues to widen.
People are stuck in the private rented sector on insecure short-term tenancies, unable to save for a deposit of their own because of skyrocketing rents and letting agent fees. Many living in London are turning away from this wonderful city to pursue work and a home elsewhere, as my hon. Friend the Member for Brentford and Isleworth set out. As a result of the affordability crisis, many live in poor, overcrowded conditions. The last accurate figures we had were from the last census and they indicated that over 11% of households in the capital were overcrowded. I am sure that most of us will know from our postbags that the number is now far bigger—I think it would be at least double that, if not triple.
Unaffordable, overcrowded and insecure—that is the housing crisis we face, and it is one we must all challenge, because it affects every part of our society. Unaffordable and insecure housing causes problems right across society, from the people living in a Victorian terraced street that now has 25% of the properties as homes of multiple occupancy to the constant churn of pupils in and out of schools. In a primary school in my constituency, 30 pupils moved in and out in one term—that is a whole class in one term. We can only guess what effect that has, not only on trying to teach a class but on each child’s education. In my constituency there is a doctor’s surgery with 12,000 registered patients, a third of whom churn in and out every year. That makes it difficult for any public health awareness campaigns. There is rising TB, and on important issues such as diabetes, obesity and smoking, GPs have very little chance of building any sort of relationship with their patients.
Across our economy, unaffordable housing has far-reaching effects. Beyond the obvious impact on the amount of disposable income that each individual and family has, the impact on our local and regional economies needs to be looked at. There has been widespread concern about the affordability of housing in London from a variety of industries. The London Chamber of Commerce and Industry reports that almost half of London business leaders believe that the insufficient availability of homes is one of the top three barriers to London’s competitiveness. The situation is so bad that some big employers have begun to look at ways of solving the problems and have begun to take matters into their own hands. KPMG now offers employees a leg up on the housing ladder with discounted mortgages and Deloitte has taken up flats in the Olympic village in Stratford to rent to employees in order to provide more secure, affordable housing. However, the majority of Londoners do not have that help and are facing the affordability crisis alone.
The Royal College of Nursing has polled its members and reports that four in 10 respondents say that they are likely to leave London in the next five years because the cost of housing is so high—a figure that no doubt reflects the experience shared by many Londoners across the economy. As my hon. Friend the Member for Hackney South and Shoreditch set out, at one time it was care assistants who could not afford to live in London, but it is now junior doctors, GPs and surgeons.
The recent mayoral election was, I believe, a referendum on housing. Londoners resoundingly endorsed Sadiq Khan in that referendum. For eight years, the previous Mayor of London—currently the hon. Member for Uxbridge and South Ruislip (Boris Johnson)—had the chance to tackle the affordability crisis in London and he failed. We now have a Mayor who is committed to building housing to ensure that all Londoners have the opportunity to rent or buy a decent home at a price they can afford. However, the scale of the challenge we face in London, combined with the lack of land and the soaring cost of rental properties and properties to buy, means that things will not change overnight. This is not just about a lack of supply, but about what happens even when things come on stream and the supply is there. In my constituency, 700 new homes are being built on my street but there is not a single affordable property, so this is not just about supply.
The Mayor of London recently revealed that the previous Mayor delivered just 4,880 affordable homes in London in his last year—the fewest in decades. The Government’s new definition of affordable housing includes so-called “affordable rent” homes, for which tenants pay up to 80% of market rent, but 80% of very expensive is still very expensive. The new Mayor’s manifesto for Londoners pledges to set up Homes for Londoners, which will build the genuinely affordable homes that we need, including homes for social rent, homes for London living rent and homes for first-time buyers, while giving Londoners first dibs on homes to buy that are built on brownfield public land. The new Mayor will need the support of all of us in this debate to achieve that, and he will need support from Government for a devolution deal that gives London more power to invest in new homes and open up Government-owned surplus land for development.
This is not just about housing, but about life chances and stable communities. Just last night we saw what is great about our city with the coming together of Londoners for the vigil in Soho, in response to the Orlando atrocity. What makes London great is the Londoners within it, and they deserve a decent roof over their heads.
I will end by posing some questions, which I hope the Minister will respond to; if he is unable to, I hope he will commit to responding in writing. What representations from across the public and private sectors have the Department received regarding employees facing insecure and unaffordable housing? What analysis has the Department and the Treasury made of the impact on the local, regional and national economy of the lack of disposable income due to unaffordable housing? Can the Minister let us know about the work that the Department of Health is doing on the cost to the NHS of poor housing and when it will report its findings? Lastly, will he commit today to working with the Mayor of London to ensure that he is able to deliver the policies that were overwhelmingly endorsed by the majority of Londoners last month?
It is, as always, a pleasure to serve under your chairmanship, Sir David. I congratulate the hon. Member for Brentford and Isleworth (Ruth Cadbury) on securing this debate on the important issue of affordable housing in London. I can assure her that this is a top priority for this Department and this Government. In the short time that I have today, I will endeavour to respond to the points made by hon. Members.
The demand for affordable housing in London is without doubt challenging. It is clear that the new Mayor has a significant task ahead of him to meet the needs of the growing population in such an important world city. A number of hon. Members asked whether we would work with him, and we certainly look forward to doing so. We all share the same ambitions—to build more homes in London and to help more people to own their own home.
We have a good track record. Since 2010, we have delivered more than 710,000 homes, including 277,000 affordable homes—67,000 in London. Our affordable homes programme delivered 193,000 affordable homes between 2011 and 2015. Last year was a record year for London. We delivered 27,000 homes, including 18,000 affordable homes—the most since records began in 1991. We were the first Government since the 1980s to finish with more affordable homes than when we started. Since 2010, we have helped 290,000 households to become homeowners, thanks to schemes such as Help to Buy and right to buy. However, even though we have delivered a record number of homes in London, there is without doubt more work to be done.
I will make some progress before giving way, because I am short of time.
Only one third of new homes in London were delivered through the open market. With London’s housing challenges, the market needs to do more, and the Government are certainly doing more. We are focusing on three things—streamlining the planning system, helping Londoners into home ownership and ensuring that housing stock is managed fairly and effectively.
We are introducing further reforms. The Housing and Planning Act 2016 gives house builders and decision makers the tools and confidence to deliver more homes and streamline the planning system to accelerate delivery. Planning permission in principle will provide greater certainty, and registers of brownfield land will make it easier to identify suitable sites, which are at a premium in London.
However, the reforms need to be implemented effectively in every area. We need to see more homes that are planned for actually being built. We have consulted on a new delivery test that drives action where build rates are below expectation. We have been working with the major house builders on how they can be clearer about their delivery plans, and I welcome the statement of intent published by the Home Builders Federation just last month.
We are doubling the housing budget to more than £20 billion to deliver 1 million more homes by the end of this Parliament. That includes £8 billion for 400,000 affordable housing starts, including 100,000 affordable homes for rent. That is the largest affordable housing programme by any Government since the 1970s.
We know that 86% of people want to buy their own home, and we certainly support their aspirations. That is why our programme to support home ownership is so important. With shared ownership, London’s first-time buyers will be able to get on the ladder with a far smaller deposit: £3,500 will secure a 25% stake in a property. Our new London Help to Buy scheme increases the equity loan available from 20% to 40%, and our help to buy ISAs are helping people to save up a deposit for their first home. Our voluntary right to buy gives 1.3 million housing association tenants the chance to buy their homes.
We will build 200,000 starter homes so that young first-time buyers will be able to buy their first home with a minimum discount of 20%. Legislation will place a duty on planning authorities to embed starter homes in the planning system. That will be supported by £1.2 billion of funding to unlock brownfield land. For high-value areas, the Housing and Planning Act allows for off-site commuted sums for delivery elsewhere. We are consulting on the details of how that will work.
We need to make better use of the existing housing stock. The market value of council housing stock in April 2014 was more than £200 billion. By selling councils’ higher-value housing as it falls vacant, we can release the locked-up value to build more homes and fund the right-to-buy discount for housing association tenants; and we will absolutely ensure that for every council house sold in London, at least two affordable homes will be built.
It is all very interesting to hear what the Government are planning nationally, but this debate is about housing in London. On the issue of the sale of high-value council properties, there are properties in my constituency that will have to be sold under the current Government proposals. The hon. Member for Torbay (Kevin Foster) has no council housing in his constituency, because it was transferred, so homes will be sold in Hackney to pay for people to buy their homes in Devon potentially, unless the Minister is able to commit now to ensuring that there is at least a ring-fencing of the money from the sale of council homes for right to buy, so that it stays within the M25.
As the hon. Lady will know, we are working up the plan for higher-value social homes that will be sold. At the moment, it has not been made clear which properties will need to be sold, but certainly they will only be properties that are vacant; and just to reassure her, we are absolutely clear that for every house that is sold in London, at least two affordable homes will be built.
I need to make more progress because I am very short of time.
We have helped to unlock major regeneration sites in London and we are investing £600 million to create 31 new housing zones in London, which will deliver 77,000 new homes by 2026. In the last Parliament, we released public sector land with capacity for 109,000 homes. We will release more land, and at least 160,000 homes will be built. The London Land Commission will continue to be an important way of engaging with the public sector to release more land for housing.
In the short time that I have left, I will pick up a few of the points that hon. Members raised. First, there was an assertion that people buying starter homes would need a minimum salary of £90,000. I am sure that many hon. Members will have seen that Shelter has done research on that, based on 2016 housing values. It came to the conclusion that people would be able to buy on salaries of £45,000 and it predicted that 30% of the people in London who are currently in private rented accommodation would be able to buy a starter home on that basis.
Another assertion was about the supply of homes. I find it difficult to comprehend that so many Opposition Members are criticising this Government’s action on providing affordable housing when, between 1997 and 2010, 420,000 affordable houses were lost from the system. I can assure hon. Members that this Government are absolutely committed to bringing forward new affordable housing. We are introducing an £8 billion programme to deliver 400,000 more affordable houses; 135,000 of those will be for shared ownership—that was a concern raised during the debate—and 100,000 of them will be affordable homes for rent.
Let me settle some concerns about the right to buy in London. Since the reinvigorated right to buy was introduced by my party as the lead party in the coalition during the last Parliament, in London, where right-to-buy housing sales have been made, on average roughly two additional homes have replaced that stock. I am getting a polite stare from you, Sir David, so I will conclude now for the mover of the motion.
I regret that the Government have not acknowledged the distorting use of the term “affordable” and that none of the Government initiatives will be of any help to people on low or average pay or those on uneven incomes, such as those on zero-hours contracts. There is so much that is wrong in the starter homes and right-to-buy initiatives. They do not deliver truly affordable housing—new housing—to Londoners in need.
Motion lapsed (Standing Order No. 10(6)).