Government Plans To Build New Homes, But Watch The Small Print

Rachel Holdsworth
By Rachel Holdsworth Last edited 25 months ago
Government Plans To Build New Homes, But Watch The Small Print
Photo by DAVID HOLT from the Londonist Flickr pool

The government is talking up a package of measures which it says will help Londoners with housing.

Old Oak Common will be the beneficiary of a plan to directly commission homes built by small and medium-sized construction companies, a policy not really used since the 1980s and regenerating the Docklands. We can't find exactly how many homes are planned for this site — it's one of five around the country earmarked under this scheme — but nationally, the government wants to build 13,000 new homes this way, 40% of which will be starter homes. £1.2bn is also being put towards clearing up brownfield land (decontamination costs push up the cost of building, which in turn pushes up prices, so this is a good thing); again, that's for the whole country.

Sounds great? We're always saying London needs more houses. But let's get to the small print. This is aimed at getting people onto the housing ladder — David Cameron said:

This government was elected to deliver security and opportunity — whatever stage of life you’re at. Nothing is more important to achieving that than ensuring hard-working people can buy affordable homes.

Except that, as we've said before, starter homes aren't that affordable for Londoners. Homes can still cost up to £450,000, which puts them out of reach of anyone earning the £9/hour National Living Wage by 2020, and families earning average wages won't be able to afford anywhere other than Havering, Bexley or Barking and Dagenham. (Still, at least these are homes that can't be bought as buy-to-let investments.)

Given that the government's push to home ownership is out of reach of many Londoners, what about those who rent? There's nothing here for the private rental sector (we think you're meant to use Help to Buy to buy your own place, the loan part of which was recently extended to 40% of the home's value in recognition of the capital's crazy prices) but a joint announcement between Cameron and mayoral candidate Zac Goldsmith has something to say about council and housing association homes.

What they say follows on from the move to allow housing associations tenants to buy their homes (a not terribly clever idea). Goldsmith is credited with persuading the government to replace every council house sold off with two more. However, again we're reaching for the small print.

The wording here is crucial: writing in the Evening Standard, the pair say "we will ensure that for every council house sold, at least two affordable homes are built". As we've pointed out on multiple occasions, "affordable" in this context does not mean what it sounds like. "Affordable housing" has a very specific meaning in government-speak. It means a home for rent at up to 80% of what the free market charges — far more than rents generally charged by councils. So for every home within reach of low paid Londoners sold off to compensate housing associations for the loss of assets under Right to Buy, two more will be built that may not be affordable to those same Londoners.

If they're built at all: research by Shelter shows that in the three years to April 2015, just one replacement home was built for every nine sold under Right to Buy. We hope that this announcement means the government has realised its laggardliness and will now pour resources into filling the gap. What we also don't know is where these new homes will be built. Will they be in the same communities as the homes they're replacing? In the same borough? We wait to find out.

Last Updated 05 January 2016