Sadiq Khan’s housing strategy is good. But London still needs to build on its green belt

The start of the green belt in Upminster, on the London/Essex borders. Image: Google.

A few weeks ago, the mayor of London Sadiq Khan published his draft housing strategy to the Greater London Authority.

The headline aims are impressive: in addition to the more than £3bn to build 90,000 affordable homes in London by 2021 announced back in November 2016, Khan wants to raise a further £250m from land value capture to fund new housing starts, and is calling for the Government to devolve London’s £4.3bn stamp duty revenue to the city.

These are all good objectives, and Khan is right to push for control over stamp duty, something we at the Centre for Cities called for in our 2015 report Beyond Business Rates. Unfortunately, however, the mayor has also continued one of the less helpful policies of his predecessors by ruling out the reform that could most immediately relieve London’s housing crisis – building on the capital’s green belt.

The reality is that London is not building enough new homes. The housing strategy notes that while London should be building at least 50,000 homes a year to keep up with demand until 2035, it is building less than 20,000 a year. As the second least affordable city in the country, London is building fewer homes per person than Barnsley, the second most affordable city in Britain.

This shortage in housing squeezes living standards and fuels poverty in London. As the strategy points out, a third of private renters are spending more than half of their income on rent, while one in fifty Londoners are now homeless. Working across the public, private, and non-profit sectors to improve the housing market, such as through supporting SME builders and improving the skills base, as well as innovative methods such as building 10,000 homes on TfL land, are all needed to stabilise housing costs in the medium term.

But despite the mayor’s ambition and the positive proposals in his plan, these reforms do not go far enough in tackling the emergency in London’s housing market. Although the mayor wants to prioritise development on brownfield land, there is too little to meet London’s housing needs. If London met all of its annual need for housing on brownfield land, all of the land would be used up in less than eight years.

Even this is an overestimate, as three decades of a “brownfield-first” approach to housing has already creamed off all but the least suitable sites for new homes. Those brownfield locations left in London are unusually expensive, complex, or undesirable to develop and are therefore less viable for affordable housing, if they are viable at all.

The short supply of land in London could be solved if we were prepared to build on green belt land with little environmental value close to existing infrastructure. Our report Building Homes Where We Need Them shows that if 60 per cent of green belt land within 2km of a train station in Greater London was developed into suburban housing, London could build an additional 432,000 homes.


Rolling this out to the rest of the capital’s green belt could unlock a further 3m new homes. Across the ten least affordable cities in Britain including Oxford, London and Bristol, building on less than 5 per cent of green belt land in the ten least affordable UK cities would supply 1.4m homes close to train stations. These new homes would be cheaper to develop and more locked into existing infrastructure than those on London’s remaining poor-quality brownfield sites, making it possible to supply more affordable housing.

However, at the moment, almost no housing is built on London’s green belt. From 2014 to 2017, local authorities released 170 hectares of London’s green belt for development – just 0.03 per cent of the capital’s green belt land, which at 514,030 hectares covers an area three times the size of London.

The mayor’s decision to rule out building on the green belt (as his predecessors did) not only blocks hundreds of thousands of potential new homes: it imposes a hidden cost, by making the housing that is being built on brownfield land more scarce and therefore less affordable for Londoners. In other words, London’s high housing costs subsidise the lack of new homes on green belt land.

London’s housing crisis can be traced back to a range of factors, and many of the mayor’s proposals will help tackle them. But by ruling out new homes on the green belt, the mayor is leaving the lowest-hanging and biggest fruit unpicked, and making housing less affordable for Londoners. To solve London’s housing crisis, green belt land will have to be released – the only question is when.

Anthony Breach is an economic analyst at the Centre for Cities, on whose blog this post first appeared. 

 
 
 
 

A new wave of remote workers could bring lasting change to pricey rental markets

There’s a wide world of speculation about the long-lasting changes to real estate caused by the coronavirus. (Valery Hache/AFP via Getty Images)

When the coronavirus spread around the world this spring, government-issued stay-at-home orders essentially forced a global social experiment on remote work.

Perhaps not surprisingly, people who are able to work from home generally like doing so. A recent survey from iOmetrics and Global Workplace Analytics on the work-from-home experience found that 68% of the 2,865 responses said they were “very successful working from home”, 76% want to continue working from home at least one day a week, and 16% don’t want to return to the office at all.

It’s not just employees who’ve gained this appreciation for remote work – several companies are acknowledging benefits from it as well. On 11 June, the workplace chat company Slack joined the growing number of companies that will allow employees to work from home even after the pandemic. “Most employees will have the option to work remotely on a permanent basis if they choose,” Slack said in a public statement, “and we will begin to increasingly hire employees who are permanently remote.”

This type of declaration has been echoing through workspaces since Twitter made its announcement on 12 May, particularly in the tech sector. Since then, companies including Coinbase, Square, Shopify, and Upwork have taken the same steps.


Remote work is much more accessible to white and higher-wage workers in tech, finance, and business services sectors, according to the Economic Policy Institute, and the concentration of these jobs in some major cities has contributed to ballooning housing costs in those markets. Much of the workforce that can work remotely is also more able to afford moving than those on lower incomes working in the hospitality or retail sectors. If they choose not to report back to HQ in San Francisco or New York City, for example, that could potentially have an effect on the white-hot rental and real estate markets in those and other cities.

Data from Zumper, an online apartment rental platform, suggests that some of the priciest rental markets in the US have already started to soften. In June, rent prices for San Francisco’s one- and two-bedroom apartments dropped more than 9% compared to one year before, according to the company’s monthly rent report. The figures were similar in nearby Silicon Valley hotspots of San Jose, Mountain View, Palo Alto.

Six of the 10 highest-rent cities in the US posted year-over-year declines, including New York City, Los Angeles, and Seattle. At the same time, rents increased in some cheaper cities that aren’t far from expensive ones: “In our top markets, while Boston and San Francisco rents were on the decline, Providence and Sacramento prices were both up around 5% last month,” Zumper reports.

In San Francisco, some property owners have begun offering a month or more of free rent to attract new tenants, KQED reports, and an April survey from the San Francisco Apartment Association showed 16% of rental housing providers had residents break a lease or unexpectedly give a 30-day notice to vacate.

It’s still too early to say how much of this movement can be attributed to remote work, layoffs or pay cuts, but some who see this time as an opportunity to move are taking it.

Jay Streets, who owns a two-unit house in San Francisco, says he recently had tenants give notice and move to Kentucky this spring.

“He worked for Google, she worked for another tech company,” Streets says. “When Covid happened, they were on vacation in Palm Springs and they didn’t come back.”

The couple kept the lease on their $4,500 two-bedroom apartment until Google announced its employees would be working from home for the rest of the year, at which point they officially moved out. “They couldn’t justify paying rent on an apartment they didn’t need,” Streets says.

When he re-listed the apartment in May for the same price, the requests poured in. “Overwhelmingly, everyone that came to look at it were all in the situation where they were now working from home,” he says. “They were all in one-bedrooms and they all wanted an extra bedroom because they were all working from home.”

In early June, Yessika Patapoff and her husband moved from San Francisco’s Lower Haight neighbourhood to Tiburon, a charming town north of the city. Patapoff is an attorney who’s been unemployed since before Covid-19 hit, and her husband is working from home. She says her husband’s employer has been flexible about working from home, but it is not currently a permanent situation. While they’re paying a similar price for housing, they now have more space, and no plans to move back.

“My husband and I were already growing tired of the city before Covid,” Patapoff says.

Similar stories emerged in the UK, where real estate markets almost completely stopped for 50 days during lockdown, causing a rush of demand when it reopened. “Enquiry activity has been extraordinary,” Damian Gray, head of Knight Frank’s Oxford office told World Property Journal. “I've never been contacted by so many people that want to live outside London."

Several estate agencies in London have reported a rush for properties since the market opened back up, particularly for more spacious properties with outdoor space. However, Mansion Global noted this is likely due to pent up demand from 50 days of almost complete real estate shutdown, so it’s hard to tell whether that trend will continue.

There’s a wide world of speculation about the long-lasting changes to real estate caused by the coronavirus, but many industry experts say there will indeed be change.

In May, The New York Times reported that three of New York City’s largest commercial tenants — Barclays, JP Morgan Chase and Morgan Stanley — have hinted that many of their employees likely won’t be returning to the office at the level they were pre-Covid.

Until workers are able to safely return to offices, it’s impossible to tell exactly how much office space will stay vacant post-pandemic. On one hand, businesses could require more space to account for physical distancing; on the other hand, they could embrace remote working permanently, or find some middle ground that brings fewer people into the office on a daily basis.

“It’s tough to say anything to the office market because most people are not back working in their office yet,” says Robert Knakal, chairman of JLL Capital Markets. “There will be changes in the office market and there will likely be changes in the residential market as well in terms of how buildings are maintained, constructed, [and] designed.”

Those who do return to the office may find a reversal of recent design trends that favoured open, airy layouts with desks clustered tightly together. “The space per employee likely to go up would counterbalance the folks who are no longer coming into the office,” Knakal says.

There has been some discussion of using newly vacant office space for residential needs, and while that’s appealing to housing advocates in cities that sorely need more housing, Bill Rudin, CEO of Rudin Management Company, recently told Spectrum News that the conversion process may be too difficult to be practical.

"I don’t know the amount of buildings out there that could be adapted," he said. "It’s very complicated and expensive.

While there’s been tumult in San Francisco’s rental scene, housing developers appear to still be moving forward with their plans, says Dan Sider, director of executive programs at the SF Planning Department.

“Despite the doom and gloom that we all read about daily, our office continues to see interest from the development community – particularly larger, more established developers – in both moving ahead with existing applications and in submitting new applications for large projects,” he says.

How demand for those projects might change and what it might do to improve affordable housing is still unknown, though “demand will recover,” Sider predicts.

Johanna Flashman is a freelance writer based in Oakland, California.