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The Progressive Policy Think Tank

Give Mayor & boroughs much more power in London to deliver a major boost in housebuilding

London will only have 50% of the homes it needs unless a radical devolution deal is agreed

London needs much greater powers over planning, taxation, and spending in order to solve the capital’s housing crisis, according to the London Housing Commission, chaired by Lord Bob Kerslake, in the final report published by IPPR today.
The Commission recommends that the Mayor and the boroughs join forces to argue for a major devolution deal on housing. In return for greater powers over borrowing, property taxes and planning, the Mayor and boroughs would have to make a joint commitment to deliver significantly higher numbers of new homes. With the ambition to double the annual supply of homes in London by 2020.
 
Working together, the boroughs and the Mayor must unlock enough land for 50,000 homes, and gear up their planning departments to agree more homes. They must also be given the go ahead for a major programme of public sector-led new housing alongside that of the private sector.
 
The Commission shows that current measures are delivering only 25,000 new homes a year – half what is needed to keep pace with London’s growing population.

Not only does London need more houses but it needs far more houses of all types and tenures. The Commission warns that promoting homeownership, if it comes at the price of fewer affordable rented properties, will add to London’s housing challenges.
 
In a ‘city deal’ for London’s housing, the Commission recommend that the cap on the boroughs’ housing borrowing limits should be lifted so that they can invest more in new supply, and that London should be able to retain a substantial portion of the money raised from stamp duty. This currently goes into the Treasury’s coffers, but the Commission suggests it should be used to directly fund the building of new homes.
The ‘city deal’ would also let London have the power to set its own planning fees to boost struggling planning departments, and the power to tax land holders and developers that miss agreed building targets.
In full, the report recommends a range of options for the devolution deal, including:
  • New planning powers: Give the Mayor power to ‘call in’ boroughs and their plans, where they are failing to identify enough land for homes or refusing too many applications to build new homes.
  • Increase local borrowing: Increase the GLA’s borrowing powers and lift the cap on the borough housing borrowing limits.
  • Keep more local stamp duty: Allow London to keep more of the stamp duty raised from homes in London, adjusting the rates over time.
  • New local planning fees: Devolve responsibility for setting planning fees to allow boroughs to charge higher fees, enabling them to speed up the planning process.
  • Ban landlords from letting poor quality homes within 10 years: Allow boroughs to set up their own licensing schemes for private landlords and allow them to use the fees to increase enforcement activity – including the condition that if by 2025 landlords haven’t brought rental properties up to a decent standard they should be barred from renting out these homes.
  • Local power on taxing developers: The boroughs should have the power to levy a discretionary tax on developers where agreed housebuilding targets have been missed.
  • Boroughs to set council tax premium on empty and second homes: Lift the cap on council tax premiums for empty and second homes.
Alongside the city deal proposals, the report also sets out recommendations for what the Mayor can do now when they take office.
Lord Bob Kerslake, Chair of the London Housing commission, said:

“London is facing a housing crisis of unprecedented proportions brought about by a chronic undersupply of new housing. It needs urgently to be building far more houses of all types and tenures.
“We are confident that the package of measures we have set out in our report would go a long way to solving London’s problems. While the Mayor and the boroughs can do more with the powers that they have now, the only route to building substantially more homes in London is to give the capital’s leaders more direct responsibility over the key levers such as land use, planning rules, housing standards, property taxes and investment and holding them accountable for delivery.
“If nothing is done, both the scarcity and affordability of housing across London will continue to worsen. Levels of home ownership will continue to fall and rents will continue to rise. That will not only put extra strains on the lives of Londoner’s living in the capital, but will also have wider social and economic consequences.

“The next strategy for London housing requires two phases. First, there is a number of actions the Mayor and the boroughs can take immediately to boost housing supply. Beyond that, there are a series of longer-term reforms, including devolving powers to the Mayor and the boroughs, which would make further inroads into the housing crisis, and maintain the momentum behind the efforts of the Mayor and boroughs.”
 
Bill Davies, IPPR Senior Research Fellow said:
 
“Fixing London’s housing crisis will not only require all parts of the housing sector firing on all cylinders, but also all parts of government pushing for new housing supply. The next Mayor, boroughs and the Government all have a stake in securing London’s economic success and maintaining its social fabric – it is in their interest to work together and to look at how homes are delivered in the capital, which will help each layer of government work towards the goal of seeing more good quality, affordable homes across all tenures.”
ENDS
 
Contact:
Sofie Jenkinson, s.jenkinson@ippr.org, 07981023031
Notes to editors:
Building a new deal for London: The final report of the London Housing Commission’ will be available from Monday 7th march at: http://www.ippr.org/publications/building-a-new-deal-for-london
 
London Housing Commission: Final report launch is on Monday 7th March 2016, 11.00 - 14.00 at the Geological Society, London W1J 0B. There will be a presentation of the findings of the commission by Lord Kerslake, chair of the London Housing Commission and a response from London mayoral candidates Zac Goldsmith MP, Sadiq Khan MP and Caroline Pidgeon. To register your attendance you must contact the IPPR press office in advance.
The aim of the London Housing Commission is to consider the challenges facing the London housing market, and produce a clear programme of action to address the supply of new homes, affordability, and the quality of the private rented sector.
Members
  • Lord Bob Kerslake, former head of the UK Civil Service and DCLG (chair)
  • Terrie Alafat, chief executive, Chartered Institute for Housing
  • Mark Clare, former chief executive, Barratt Homes
  • Nick Walkley, chief executive, London Borough of Haringey
  • Professor Christine M Whitehead, emeritus professor of housing economics, LSE
Sponsors: Nationwide, Mears, Catalyst, Poplar Harca

The full report recommendations are as follows:
 
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 the extra powers described above, 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