Building a new deal for London: Final report of the London Housing Commission

Providing enough secure, affordable and decent homes is one of the biggest challenges facing the capital – London needs at least 50,000 of them each year to keep pace with its growing population. Currently, it is falling far short: last year only 25,000 new homes were built.

London’s unprecedented housing crisis has serious consequences. Businesses struggle to recruit and retain staff. More and more people live in overcrowded social and rented homes. Housing-induced poverty remains stubbornly high. And the government is spending billions of pounds on housing benefit to keep a roof over renters’ heads and provide temporary accommodation for homeless families.

The next mayor of London and the 33 boroughs should join forces to strike a major devolution deal with central government. They should commit to increase supply to 50,000 homes a year by the end of the decade, to ensure that London has sufficient affordable housing for citizens of all income levels, and to eliminate poor conditions in the rented market. In return, the government should give London significant new freedoms to control its own planning, borrowing and taxes.

‘The London Housing Commission does not claim to have all of the answers, but it is clear that the status quo will not do. The housing crisis will not solve itself, and radical measures of the sort we outline in this report will go a long way to delivering the volume of quality, affordable homes that the capital desperately needs.’

Lord Bob Kerslake, chair

Video & podcast: Lord Kerslake presents the findings of the final report, with reactions from London mayoral candidates Zac Goldsmith MP, Sadiq Khan MP and Caroline Pidgeon.

The terms of a new housing deal with central government

The mayor and London boroughs would be significantly better able to address the housing crisis if they were given new powers by central government. So they should come together to ask government for a new devolution deal, in return for a commitment that they will, by 2020, double the annual supply of homes.

The mayor and boroughs will only be able to deliver on that commitment if they work very closely together. To do that, they should form a joint London Housing Committee to coordinate housing policy across the capital, and to negotiate this new deal with central government.

They should ask central government for the following:

• To exempt London from the National Planning Policy Framework (NPPF) and instead give the mayor’s London Plan the same status as the NPPF – and give the mayor the power to force boroughs to change their plans if they are not identifying enough land for housing. This will mean that local authorities outside London have a duty to cooperate with the mayor to help solve London’s housing crisis.
• To allow the London Housing Committee to set planning fees for London.
• To allow both the GLA and the boroughs to borrow more for housebuilding and infrastructure.
• To devolve stamp duty on the same model as the government’s recent devolution of business rates to local authorities, allowing London to retain a substantial proportion of its stamp duty income, in return for an equivalent reduction in grants from central government, and to adjust stamp duty rates in consultation with the business community, such as via the London Chamber of Commerce and Industry and London First.
• To allow the boroughs to levy, at their discretion, council tax on developments that fail to meet agreed building targets.
• To allow boroughs to create their own landlord licensing schemes.
• In return, the mayor and boroughs should commit to central government:
• To double the supply of new homes to London to 50,000 per year by 2020, and to maintain this for at least the following five years.
• To ensure that London has sufficient housing at submarket rents.
• To eliminate non-decent housing in the private rented sector by 2025.
• To lend credibility to those commitments, the mayor and boroughs should also commit to take a number of specific actions, including:
• To identify sufficient land to deliver 50,000 homes per year for the next decade.
• To significantly increase the volume and speed of planning approvals, by increasing the capacity of boroughs’ planning departments and creating a London planning inspectorate.
• To earmark a significant proportion of public land for affordable housing and new privately rented housing
• To take an active lead in the nurturing of housing and planning skills in the private and public sector.

Immediate actions for the mayor and boroughs

Even if central government does not rapidly give London these extra powers, there is much the mayor and boroughs can do right now to address the housing crisis and to prepare the ground for a future devolution deal.

Find more land

• Speed up the release and development of public land identified as not in use by the London Land Commission for building homes.
• Lend planning expertise to Transport for London for it to review the potential for higher-density development around tube, rail and bus stations.
• Support communities to conduct their own neighbourhood planning to identify opportunities for regeneration and small sites not currently in the London Plan.
• Review greenbelt land near public transport sites, in exchange for improved community amenities and the extension of greenbelt protections in other places.

Turn land into homes

• The boroughs should conduct and publish an annual audit of the progress of local planning applications in their areas, and the progress of large sites in particular. The sites identified by the audit as needing extra support to be developed, either from the boroughs, the mayor’s office or central government, should be given that support.
• Offer public landowners the support of the London Development Panel to turn public land sites into new homes, on condition that a proportion of the public land is used exclusively for privately rented housing (for a limited period of time).
• Where it is appropriate for the site, or if a developer cannot be found, the combined resources of the mayor and boroughs should be used to directly commission housing on sites through housing associations and private developers.
• Support smaller developers by offering them first refusal on a proportion of small public sites identified for development through communities conducting their own neighbourhood planning, at no initial charge. The public landowner should take a stake in the sale or rental value of the homes created.

Improve planning

• Boroughs should publish an annual review of their progress against national and local targets for development.

Provide more affordable homes

• The mayor should immediately issue London-wide guidance on negotiating affordable housing with developers, and commit not to call in planning applications that demand a specified proportion of affordable housing.
• The mayor and boroughs should do a deal with housing associations to double their housebuilding in exchange for a pipeline of new sites.
• Consult on simplifying the affordable housing requirement of planning negotiations between boroughs and developers through the establishment of a London-wide affordable housing tariff.

Improve substandard rented homes

• Launch a London lettings hub to link up tenants directly with good-quality, accredited landlords, and to offer discounted lettings fees to landlords offering longer tenancies.