An annoying, yet foreseeable side-effect of the requirements for affordable housing whenever a new construction is approved has been to make most housing unaffordable.

If you ask a developer to build a block of low-cost houses as the condition for building the main development, they push that cost for the “planning permit” onto the retail price of the saleable flats.

The result has been to push up the price of new flats to a level that the average person cannot afford – while social housing policies means that only the poor are allowed to qualify for the “affordable” homes.

Deemed too rich to qualify for social housing, yet too poor to afford to buy a flat, the majority of families are stuck in renting. It seems odd that people who are “too poor” to afford to buy a home are also expected to subsidise the cost of housing other people though the higher rents they have to pay to landlords who paid a “social premium” for the property.

The problem is simple.

Compare the skyline of London to the skyline of any other city in the developed world. It is very different.

We have low-rise, low-density build – due to planning restrictions designed to meet the needs of those who own property at the expense of everyone else. We value the view of St Paul’s from Richmond Park more than the welfare of hundreds of thousands of people whom the impacts this has on house prices has (and the massive Housing Benefit spend and impacts of negative social cohesion impacts of highly rationed social housing).

The question is how to build in the needs of those who cannot afford a suitable home, have to pay a high proportion of their income to do so, or who are forced into 2 hour long commutes to work into the planning system. No-one addresses this – to do so would be political suicide.

This is a massive issue with the potential to provide a real political focus for an entire generation. New Labour & Tories have indeed failed and have no answers. Well done Jenny Jones and the Greens. It’s up to us to take this kind of stuff forward.

Good article, thanks!

It’s mad that we cheer on rising house prices, sell off social housing (at insane discounts) and build next to nothing. All seemingly designed to make the asset-rich richer, and everyone else poorer. Bad news for young and poorer people, but also (in the long term) for the economy.

A good start would be to abolish the right to buy on social housing built from now on. Why should councils or housing associations build or buy housing if they can be forced to sell it off at a huge discount within two years? Hardly an incentive to invest, is it?

Even some pretty right-wing commentators are coming round the realization that if we need social housing, we can’t be continually selling it off. Or if we do, we should charge market rates — why should the homeless subsidize the housed?

PS: To be fair, this problem is well beyond the capacity of Ken or Boris to make any real difference

IanVisits: “If you ask a developer to build a block of low-cost houses as the condition for building the main development, they push that cost for the “planning permit” onto the retail price of the saleable flats.”

All sounds very logical on the face of it, but in reality the sale price of the housing is pretty much unrelated to the development costs – housing just about anywhere in the UK is expensive not because it costs a lot to build but because of a combination of scarcity value and (in recent years), landlords large and small speculating on the value of equity. If you look at the changes in building costs to developers they bear almost no resemblance at all to the changing prices of new homes.

In reality requiring affordable housing does not much inflate the prices of homes, although in an economic crunch (like this one) it may well deflate developers’ profits to the point where they end up either insolvent or unable to build anything, which brings its own problems (no new houses at all).

I do despair a bit for the housing situation in the UK. It’s politically unacceptable to implement large-scale directly subsidised building of social housing, or to regulate private landlords (too socialist). It’s also politically impossible to relax the most minor greenbelt restriction.

Until that political consensus changes, we’re just going to have to get used to very large numbers of people suffering higher levels of overcrowding (and house sharing), I’m afraid. Given that lots of single people and couples from earlier generations will still be happily living in half-empty five bedroom family houses they bought 40 years ago, there could be quite a bit of social tension created.

It’s pretty obvious to most of us that the problem you’re talking about is not the fault of either Livingstone or Johnson. It’s the fault of a buy to let housing trend that successive governments allowed to grow more and more popular. It’s an issue that no one campaigns on despite the fact that almost everyone in their 20s and 30s in London is absolutely irate about it.

House prices have risen because people can borrow more money . If two or more people are competing for an average house , the amount which can be borrowed will determine the final price.
1. If someone can only borrow 3.5 x times the average salary plus 10 % deposit = 3.5x £25k= £87.5Kx 1.1=£96.25
2. Allow 6x £25k= £150K for 100% mortgage.

V Cable points the above problem of increasing credit raising the price of houses.
If we returned to the situationof the early 70s of 3x a single person’s salary plus requiring a 10% deposit , we could probably greatly reduce the massive increase in property prices.

If the former industrial parts of the UK were regenerated by developing manufacturing , we could reduce the pressure on southern housing due to migration from other parts of the country.

@6 “It’s the fault of a buy to let housing trend that successive governments allowed to grow more and more popular. It’s an issue that no one campaigns on despite the fact that almost everyone in their 20s and 30s in London is absolutely irate about it.”

Nina, have you any idea why there is no campaign? It puzzles the hell out of me.