London's Economic Housing Policies and the Shortage of Affordable Housing

London's economic housing policies and how the use value of a home is overpowering the
exchange value of a home which has a detrimental impact on the shortage of affordable
housing in London.
By
Alexander Waithe
P12221732
Dissertation submitted in partial fulfilment of the requirements for the degree
of M Arch
Leicester School of Architecture
De Montfort University
2019
ARCH 5013
Comprehensive Dissertation
STATEMENT OF ORIGINALITY

London's economic housing policies and its impact on the shortage of affordable housing
in London
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quotations, summaries or extracts from published sources have been correctly
referenced. I confirm that this work, in whole or in part, has not been previously
submitted for any other award at this or any other institution.
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Executive summary
This dissertation is bound to examine one of the main challenges experience in
London, which is the housing crisis. This entails looking at the London’s affordability crisis,
London’s housing crisis, Affordability of housing in London salary ratios to House Prices,
London housing strategy, why more working-class people are now renting and not buying
homes, as well as the use Value VS Exchange Value. From the results obtained in the
dissertation pare, the problems of housing started way back in the early twenty-first century.
This comes at a time that most people started to get attracted to life in the city.
This resulted in a slow but steady increase in the price of houses in London, and
currently, the issue is on the peak. The various governments have not taken strong initiatives
to bring a solution to the matter, and this probably adds to the explanation of the issue is one
of the major crisis facing the United Kingdom, as per a read percentage of the residents in
London.
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London's economic housing policies and its impact on the shortage of affordable housing
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Table of Contents
Executive summary...............................................................................................................................2
Introduction...........................................................................................................................................4
Concept of affordable housing...........................................................................................................4
Literature review...................................................................................................................................6
Social renting and the rise and fall of public housing........................................................................6
Review of the London housing market..............................................................................................8
The cost of buying a residential property in London.....................................................................8
The cost of renting a residential property in London is also increasing.......................................11
Affordability of housing in London salary ratios to House Prices...................................................12
The Affordability of housing in London risks to the housing market and the responsiveness of
housing supply.............................................................................................................................13
Economic Affordability................................................................................................................13
The relationship between the earnings and the house prices in London....................................14
House price to earnings ratios by London borough.....................................................................15
House price to income ratios among those taking out mortgages..............................................16
Why more working-class people are now renting and not buying...................................................18
ANALYSIS AND DISCUSSION.................................................................................................................19
London housing strategy..................................................................................................................19
The vision and priorities of the mayor.........................................................................................19
I. Building homes for the Londoners.....................................................................................20
II. Delivering Genuinely Affordable Homes............................................................................22
III. High-Quality Homes and Inclusive Neighbourhoods..........................................................23
IV. A Fairer Deal For Private Renters And Leaseholders..........................................................25
V. Tackling Homelessness And Helping Rough Sleepers.........................................................26
VI. Tackling homelessness and its root causes.........................................................................30
Section summary.........................................................................................................................30
Conclusion...........................................................................................................................................31
Bibliography.........................................................................................................................................32
List of Figures.......................................................................................................................................36
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London's economic housing policies and its impact on the shortage of affordable housing
in London
Introduction
Concept of affordable housing
The Plymouth city council has in the past defined the concept of affordable housing
as: 'Low-cost market, as well as subsidised housing which will be available to individuals that
are not in a position to either buy or rent or buy houses generally available on the open
market. There are certain demographic cleavages, which are caused by the concept of
affordable housing, for instance, inaccessibility of specific places within London by the
essential workers including the police officers, teachers, nurses, and doctors among others.
The problem of inaccessibility in comparison to the salary, which a person earns, it cannot
allow that individual to secure an affordable home (Abidi, 2018).
Additionally, the affordable housing issue has also been defined in the aspects of the
infrastructure needs. The needs have been explored in the below ways: employment and
employability, transport and infrastructure, the changing face of London's population, as well
as the competitiveness and culture. Hence, affordable housing is a situation where the number
of affordable houses for accommodation is not enough to satisfy the increased demand for
houses in general. This kind of situation increases the prices of the houses, which affected the
economy as well. Thus, this definition is ideal to the affordable housing concepts.
The concept of affordable housing is related to some extent, some of the economic
and social aspects such as crime, poverty, as well as social exclusion. This information is also
supported by evidence, for instance: an interview with Kate bond revealed her suspicion on
the social issues related to the affordable housing and would not allow her children to play in
such areas (Apple, 2014).
Ethically, affordable housing can be viewed in terms of the intentional causing of
housing shortages, which is being connected to issues such as poverty crime and low wages
for a specific group in society. Economically, the issue is regarded based on the factors of
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London's economic housing policies and its impact on the shortage of affordable housing
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supply and demand, and the available resources, which whisk the idea of ethical reasoning
towards the housing affordability.
The dissertation paper will be divided majorly into five sections namely, introduction,
literature review, discussion and analysis, conclusion and recommendations, and finally the
references as shown in the below section
 Chapter 1: introduction
This section will denote a synopsis of the affordability housing crisis in London and
perhaps the major aim of the dissertation
 Chapter two: a literature review
The section of the literature review will majorly focus on the previous literature in
regards to the housing crisis in London. It will be a comprehensive section as it
vividly presents the history and the background of the housing crisis, which is
currently one of the major challenges facing the residents in London, despite being
one of the most striking cities in the world to live
 Chapter three: analysis and discussion
The analysis section will cover a discussion of how the issue of affordable housing is
being addressed and the plans towards bringing a solution to the menace
 Chapter four: Conclusion and recommendations
This section gives a brief overview of the dissertation, highlighting some of the major
findings of the research, as well as giving some of the recommendations in regards to
the topic of discussion, which is Affordability of housing in London.
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London's economic housing policies and its impact on the shortage of affordable housing
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Literature review
Social renting and the rise and fall of public housing
One of the social issues, which have been in the public domain of the last three
decades in the United Kingdom, is the rise of housing in London. The social renting has
notably been on the long-term decline, which has been greatly sponsored by the waves of
rollout and rollbacks Thatcherite new labour neo-liberalism. Currently, the level of neo-
liberalism is tracing a different shape following the housing and planning bill 2015-2016,
which is under various parliamentary revision and is deemed the end of the council housing.
The public housing sector had all along been a great and massive aspect until the
1980s post-war housing issues, which led to a significant decline (Banham et al., 2012).
Various local council embarked on policies and building programs to revive the issue of
housing. As a result of the programs meant to revive the housing issue, there was an increase
of local authority houses and flats by close to 60% between the years of 1961 and 1981 as
demonstrated in the figure below for the London house table (Best & Kleven, 2017).
However, the figures for inner London were 43%, which were unprecedented for the
case of the long-term labour boroughs such as Southwark (65%), tower hamlets (82%).
Nonetheless, in spite of the massive reduction of the magnitude of the London council
housing stock, close to 440, 000 London households remained council tenants in the year
2011, whereas a number of the people resided on the estates built by the council as either the
private tenants or homeowners (Best & Kleven, 2017).
There is a notion shared in London, of a huge council scale as compared to the public
housing projects in the United States, as seen in the powers observations on the housing
council anguishing in a situation known as ghettoisation. Certainly, a number of the London
councils houses inhabitants the most deprived segments of the total population. However,
Wacquant argues that a spatial concentration of deprivation and poverty does not comprise
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London's economic housing policies and its impact on the shortage of affordable housing
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the ghettoisation factor (Barker, 2013). The major difference between the London local
council is that mostly they cater for a multi-ethnic population, majorly who either work as
part-time or full-time labourers while the united states local council estates carter for most of
the marginalised African-American communities.
A massive contraction has been experienced in the public housing sector since 1981,
coupled with overall minimisation in the establishment of social housing. As seen above,
there was an overstep into the council stock by the RTB and the action by the government to
withdraw the funding resulted in a decrease in the building of new homes. In the year 1988, a
stock transfer of homes from the government to the individual ownership was introduced
under the conservatives housing policies, which led to the DE municipalisation by
minimising the housing powers and the roles of the local public authorities who had been
elected (Beswick et al., 2016).
The stock transfer was rolled out, affecting most of the larger cities such as London,
Birmingham, and Glasgow. For the cash, strapped London Labour councils such as Lambeth
and tower hamlets got themselves locked out in the labour government. To levy funding from
the government, the majority of the local councils opted for stock transfers from the central
government, leading to transfer of 55000 homes in 15 boroughs from 1998 to 2007(Birns,
2019). Most of the council members, however, were in harmony with the significance of
preserving the council housing as seen in the majority of the transfers of the capital. Even
though there was an investment of funds in the existing council stock, the contested transfer
program renters from one tenancy to another with less security without considerably
complementing the overall supply of the social rental homes (Best and Kleven, 2015).
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London's economic housing policies and its impact on the shortage of affordable housing
in London
Review of the London housing market
The current size of London is close to 8.2 million who are currently living in
approximately 3.3 million homes. The anticipation is that this population will be 10 million in
the next twenty years, with 3.9 million households accounting to close to thirty per cent of the
total growth. The new housing supply in London officially has lagged behind the household
projections. By the year 2033, the projection suggests that the new household will have
grown at a rate of c. 36000 annually. In the year 2022-2012, the average of the London
homes amounted to 24870, which was 24582 on average for the last five years (Blanchflower
& Oswald, 2013).
In 2022/12, the total amount of affordable housing was 4372 across the capital, in
contrast to the 16176 completions. Previously, the increased amount of the affordable houses
was as results of the fiscal stimulus kick start programs and monies. The figure below shows
new affordable housing completions (Beswick et al, 2016).
The cost of buying a residential property in London
Comparatively, the house prices in London are high by 57% as compared to other
houses in England. This figure continues to grow annually than in other places in the English
housing market. Significantly, London has previously experienced increased house prices in
the past 17 years than the whole of the country, in spite of a steep deterioration in the values
in the 2008/08 property market crash (Blanchflower & AJ Oswald, 2013).
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