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Time to think outside the box if we are to solve the capital’s housing supply crisis

The housing crisis continues to haunt London. Warnings about the shortage of homes that are suitable, affordable, and desirable are now flooding in on a daily basis.

Some of the reasons for this problem are easier to put a finger on than others. Despite the headwinds of Brexit, the capital’s population continues to grow at a rapid pace, which is fuelling demand for more homes.

According to the latest draft London Plan from City Hall, nearly 11m people could call London their home by 2041. From today’s population of 8.9m, that is equivalent to an increase of nearly 1,600 people every week for the next 23 years.

In response to this growth, official targets for housing in London are expected to increase.

The London Plan proposes building around 65,000 homes each year, which is a 50 per cent uplift on today. But on average, London has delivered only 25,000 homes a year over the past decade or so. Closing that gap will be a major challenge.

So what can be done to try and deliver more flats and houses?

One option would be to nibble into bits of London’s greenbelt – particularly those parts which are not high quality. Think tank Centre for Cities estimated that nearly half a million homes could be built on just two per cent of the capital’s belt. But of course, politicians are wary of allowing this to happen, with concerns revolving around opposition from local voters, as well as the unfounded fear of urban sprawl.

Another option is to build more rail infrastructure. Crossrail 2 and an extended Bakerloo line could help make way for between 200,000 and 300,000 homes. But, frustratingly, both rail lines are years away from delivery.

On the supply side, embracing the use of off-site facilities to build houses could help reduce construction times and boost productivity. One study even suggests that net financial savings of seven per cent were possible.

Prefabrication – where structures are assembled in a factory before being transported to the site – could alleviate the supply backlog. But despite the rising popularity of prefabrication in countries like Germany, barriers in Britain still remain.

For example, new factories incur startup costs and require long production runs to make them profitable.

Another problem is the fact that insurers, lenders, and homeowners have historically been wary of new production techniques, which in turn slows down progress.

Having shared facilities for power, telecoms and water could help to reduce the time and cost of connecting homes into utilities. While this model has been adopted in parts of the US and New Zealand, UK regulators and service providers are concerned about the risks associated with these “dig-once” approaches – because of the difficulty deciding how costs are allocated, and who is to blame if something goes wrong.

In reality, it will take a combination of these approaches to get London’s housing supply up. And to have any impact, they would need to sit alongside greater powers and resources for London’s government. That would mean an end to one size fits all policies from Whitehall, devolution of taxes to our town halls, and probably a major public housing programme.

In turn, London could continue to be an economic hub that benefits the whole of the UK. And it might take the edge off one of the biggest challenges to the future prosperity of the city – giving everyone a place to call home.

Source: City A.M.