By James Murray
Today, for the first time in a decade, more adults under 40 are leaving the capital than moving here from elsewhere in the country. That’s bad news for London – and shows the scale of the challenge we face for the next generation.
For many young people who grew up in London or who moved here in their 20s to find a job, the tipping point is housing. Average house prices in London are more than five times their 1970 levels in real terms. Owning a home in the capital is increasingly a pipe dream. In 1990, half of London households headed by someone aged 25-34 owned a home – today, the proportion has fallen to around a quarter. At the same time social housing has been in decline too: 30 years ago, it was the largest tenure for Londoners – today, it is the smallest.
In place of social housing and homeownership, the private rented sector has expanded rapidly. But without serious reform, the private rented sector is simply not a good enough alternative for many young Londoners. It offers little stability: with no right to security, renters and their families can be given notice after just six months in their home, even if they are model tenants. It costs too much: average private rents in London have risen more than three times as fast as earnings since 2010, with around a quarter of privately renting households in London spending more than half of their income on rent. And too much of it is not good enough quality: a quarter of privately rented homes still fail the decent homes standard – more than double the proportion of owner-occupied homes.
This failure is hitting young Londoners hardest. But Londoners of all ages and housing tenures want it solved, including seeing more homes built. Net support for homebuilding has risen rapidly across the board in the capital, from -13% in 2010 to 49% in 2016 – with the support strongest, as you might expect, amongst renters. Yet we risk squandering this goodwill if too many homes are built that Londoners can’t afford, if too many developments fail to consider how they will benefit existing Londoners, and if nothing is done to improve the private rented sector in the meanwhile.
That is why, first, we need to do more to help renters. Building affordable homes will help renters over the longer term, but serious reform of the private rented sector itself is long overdue. London councils have worked with the Mayor on a voluntary basis to introduce a rogue landlord database. City Hall is calling for tenancies to be reformed and for limits on unacceptable rent increases. Whilst central Government’s consultation on the question of longer tenancies is a step in the right direction, the private rented sector still needs to be thoroughly overhauled to make it fit for long-term living.
Second, we need to do more to help private renters make the transition to social housing or homeownership. Today, London has secured a record slice of the national affordable homes funding pot currently available, and more homes for social rent or shared ownership were built last year than in any since devolution. But London needs something like four times its current level of investment in genuinely affordable homes to meet Londoners’ needs.
And third, there is widespread consensus in London that councils and the public sector must be enabled to rise to the challenge and build at scale. London councils are enthusiastic about taking on this challenge, and the Mayor has launched a dedicated programme to help them do more. But ultimately, Government needs to equip councils and City Hall with far more powers and money to be able to build the homes the next generation of Londoners needs – without which the future of the capital is at stake.
Previous generations of Londoners had grown up believing they would probably be able to buy a home or rent socially at some point in their lives. But for the current generation of young people this has changed. Without a step-change on housing, more young Londoners than ever will have no choice but to leave the capital – and we’ll all lose out as a result.
James Murray, Deputy Mayor for Housing and Residential Development, James Murray
Lindsay Judge, Senior Research and Policy Analyst at the Resolution Foundation