Housing Minister Brandon Lewis speaks to the London Real Estate Forum about the housing market.
Ladies and gentlemen
The 19th-century Conservative Prime Minister Benjamin Disraeli once described London as a roost for every bird.
He’d be pleased to learn his observation had turned into prophecy.
Because 150 years later birds are still flocking to this great city, and the roost is still growing.
London is the most visited city in the world.
A cultural and economic powerhouse that no other city can match.
It’s also a magnet for domestic and international talent.
Earlier this year the population reached 8.6 million, passing its 1939 peak earlier than experts predicted.
That number is expected to rise to 9 million by 2020, and 10 million by 2030.
Such phenomenal strength can sometimes provoke fear and antipathy, but that’s wrong.
London’s success should be celebrated, not resented.
Emulated, not contained.
But we must also recognise London’s success poses unique challenges for its future.
Chief among these is the extraordinary pressure being placed on the capital’s housing stock.
There is only one way this increased pressure on the capital can be relieved, and that is by building more homes.
Of course, the strength of London’s property market means new homes will attract foreign buyers wanting to invest.
All developers must now market new properties here in the UK first – but the last thing we would want to do is introduce illiberal, protectionist measures that would strangle investment in the market.
Such a move wouldn’t just restrict home ownership – it was jeopardise the capital’s status as a world-class city, to the detriment of all Londoners.
Boosting housing supply will be a challenge for London for decades to come, and it’s one this government believes is best met by people who run London and are accountable to Londoners.
That’s why during the last parliament we transferred significant powers from the government’s national housing agency, the Homes and Communities Agency, to the Greater London Authority.
At the time it was seen as a major change to the status quo.
Today it is simply one of the vanguards of decentralisation, and a symbol of an ever-strengthening consensus in British politics and society.
The belief that more power should be released from Whitehall and given to local areas, and local people, whether to encourage house building, boost economic growth, or provide better public services.
This government will help create the new Northern Powerhouse, and I have no doubt northern cities will be looking to the capital and elsewhere for inspiration.
But it won’t be to Whitehall, it will be to London itself, which has already demonstrated what can be achieved when real power is put into the hands of local people.
The Mayor has already demonstrated that these new powers are being well used, setting an ambitious target to deliver at least 42,000 new homes each year.
That figure has not been reached under any government since the 1930s, and would represent a near doubling of average annual output compared to the last decade.
The Mayor now has the power to establish Development Corporations and Mayoral Development Orders, to speed up the delivery of large-scale developments across the city.
Take Old Oak Common in West London, a stone’s throw from Paddington Station.
Thanks to the new Mayoral Development Corporation that area will have a new lease of life with plans for 24,000 homes and up 55,000 jobs.
Those homes will be in a prime location when another major project, Crossrail, comes to fruition.
Big schemes like this enjoy positive coverage and publicity.
But often the media paint a negative and simplistic picture of the property market in London.
The reality is that progress is already being made. More homes are being built in the capital across every tenure.
New build completions in London rose to 18,700 in 2014, up 13% on the year before.
More importantly, figures from the Home Builders Federation show that 47,650 homes were granted planning approval on schemes of more than 10 units in 2014.
That’s a full 43% higher than 2013, and the highest annual total since the data started being collected in 2008.
The Mayor has also committed to deliver 100,000 affordable homes over his two terms. Almost 94,000 have already been provided.
Last year we provided the GLA with £1.1 billion because 2014 to 2015 saw the highest number of affordable homes delivered since current recorded stats began in 1991.
The GLA believes it’s probably the highest annual total for 34 years. That’s money well spent.
While the primary role of the government is to support the Mayor’s plans for housing, we will also continue to channel financial investment towards London’s housing, while balancing the needs of the capital with the rest of the country.
In the early days of the last government we launched the Get Britain Building fund – investment targeted at getting workers back on stalled housing developments.
That fund has got work started on 12,000 homes – a quarter of which are here in London.
For the first time the government is investing directly in the private rented sector London has benefited from a share of the Build to Rent fund, to help build new homes specifically for private rent.
And today, I can confirm 3 new deals worth over £250 million, to help deliver over 1,000 additional homes for rent across the capital.
It means that over the past 2 years, we’ll have put plans in place to deliver over 4,000 new homes for private rent, in deals with nearly half a billion pounds.
On top of this we’ve established the Private Rented Sector Taskforce, which has facilitated ambitions to invest over £10 billion in new private rented homes, including 30 new entrants to the market.
The research firm Molior says 112 purpose-built private rent schemes in London as of February 2015, up almost 8% on the year before.
We want to see much more investment London’s private rented sector – and the last thing we will do is deter good landlords and investors by increasing red tape and unnecessary regulations such as rent controls, which is what the opposition were promising before the election.
Housing zones - permitted development
The government will continue to invest in London’s property market. But it will come as no surprise to the audience here today that finance and good business ideas are only part of the solution.
The other vital ingredient is land.
Land is clearly scarce in the capital, so we need to ensure new homes are built in the right places – especially on previously developed land and by using existing buildings where we can.
We’ve also been working with the Mayor to create 20 new housing zones on brownfield land, with £200 million from the Greater London Authority matched pound for pound with government funding.
These brownfield sites will be led by partnerships in the local area, using development orders to speed up the process of housebuilding.
The number of long-term empty homes is already at a record low of 0.6%.
We’ve also changed permitted development rights so underused offices can be converted to residential properties.
Estates Gazette have estimated that this could deliver 6,000 new homes in outer London alone.
Using brownfield sites and underused building will be vital for boosting supply, but as we look to build more homes across London, we cannot overlook the need to regenerate those inner city estates that are dominated by the high-rise blocks of the 1960s and 70s. I’ve seen some fantastic examples, including Packington Estate and City Mills.
We’ve set aside £150 million to invest in kickstarting this vital work – not only tackling the deprivation that blights the lives of residents in those estates, but to build more homes of good quality design for the whole community.
As I have said, the population of London has now exceeded its 1939 peak, and yet the inner boroughs still contain 1.7 million fewer people than they did in 1939.
According to Savills, rediscovering just half of this former housing capacity would supply London’s expected housing needs for the next 17 years.
Completely rebuilding these estates will provide more homes and commercial space using the same amount of land.
It sounds radical, and it is, but past experience tells us doing a little bit here and there won’t work.
We need to be this ambitious if we’re serious about increasing the quantity and quality of homes in the capital.
The housing market in London is expanding and improving, but we all know London needs more homes. No one disputes that.
Our capital is a city where people want to be.
For some it is a magnet for their talent; for others it is a land of opportunity.
However people view their life in London, one thing unites them: they all need somewhere to live.
The government can help create and sustain confidence in London’s housing market, for those who build, buy, rent and invest in housing.
Most importantly, we will continue to fund and support the Mayor to deliver the homes London needs to maintain its position as the world’s premier city.
So we can ensure that those birds keeping coming home to roost for the next 150 years.