According to recent figures from the Office for National Statistics (ONS) published in the Financial Times, migration away from London is at its highest recorded level. Further analysis of the ONS figures uncovers negative net migration to the city for every age group, save those in their twenties. The continuing squeeze on household finances coupled with a shortage of affordable housing has resulted in a growing number of Londoners looking further afield.
Improved transport links, affordable housing and a higher number of job opportunities in the regions have made it more appealing to engineer a move away from the Capital.
In 2016-17, the government’s target of 300,000 new homes was missed by nearly 30%. While many regions outside London are surpassing their housebuilding quotas, London councils have consistently fallen short.
In some areas, new housing has created more problems than it has solved. The London outflow has resulted in spikes of demand elsewhere, driving up prices and forcing locals to move out of town. Roads are becoming increasingly congested, while the rail network is struggling to cope with the surge in passenger numbers. This is leading to social tensions and pressure on already limited local resources.
The property industry is caught between a lack of space and spiralling prices in London, which is increasing building costs. Yet roads, railways, schools and other local services require massive investment. Amidst Brexit uncertainty, there seems to be neither the will nor the hard cash from Local and National Government to carry out this investment.
Instead of focusing on the seemingly insurmountable issues in commuter towns, the problem could be more effectively addressed by concentrating on London itself.
Although London rents and house prices have tailed off recently,
London’s luxury property sector has enjoyed an impressive growth stint in recent years. Nearly two-thirds of the 200 luxury flats in the tower at Vauxhall’s St George Wharf have been sold to overseas investors, indicating that such developments have not lost their appeal.
In the private rented sector, the lack of affordability for prospective tenants has deterred investors, as rental yields drop and new tax regimes and buy-to-let restrictions bite. Investors looking to offload properties without taking a hit on the price has also had an impact.
One solution mooted by developers is to ease planning restrictions to stimulate investment in the Capital’s housing projects.
The PD regime allows for offices to be converted to housing with minimum planning fuss. Yet anecdotal evidence suggests the ‘one size fits all’ approach of PD doesn’t work everywhere. Indeed, certain London boroughs have suspended the operation of PD so as not to diminish employment opportunities.
Planning policies and recommendations could be introduced to encourage the redevelopment of previously industrial areas.
However, the majority of brownfield land in and around London is either in use or not viable for development. Decontaminating brownfield land is costly, and this is often reflected in the prices of homes erected there. The Battersea Power Station redevelopment, where three-bedroom flats are listed for more than £8m, is a prime example.
London’s Green Belt has increasingly been encroached on to meet housing needs. Protection of the Green Belt is seen as key to environmental sustainability in addition to maintaining London’s character.
Relaxing restrictions further would make room for housing, but an increasingly beleaguered government may be unlikely to risk the ire of the perceived metropolitan elite in proposing such a move.
Perhaps the answer is for planning policy and procedure to encourage higher density and mixed use development, which could also benefit local London economies. Encouragement of such schemes would mean more funding from council tax and business rates to support local services.
However, large developments are often unpopular with local residents. Following a backlash from local residents’ associations, the housing secretary recently overturned planning permission for a 17-storey ‘skyscraper’ in Croydon, a borough desperately in need of housing, due to ‘concern about the design’.
For those who don’t need a great deal of space and want to live close to the city centre, the ‘micro-home’ could become a new market. While not a long-term solution, they might be an attractive stop-gap for graduates emerging from increasingly upmarket student accommodation. Planning regulation should perhaps encourage the development of micro-home communities.
The economic impact of a no-deal Brexit, which remains a real possibility, could result in a number of existing housing projects being shelved or pulled altogether. New projects would also be thrown into doubt, risking a reduction in housing delivery.
Perhaps as part of the package of measures designed to stimulate the national housing market there are actions that can be taken within the Capital to best utilise what is already there.
For more information on this article contact Caroline Frampton in the Real Estate Team at Ashfords.
