London's Affordable Housing
London is mired in its worst downturn of affordable housing supply in decades, with soaring inflation, high interest rates, and rocketing building safety costs wreaking havoc on the construction sector. Housing associations are the non-profit groups that are behind much of the UK's affordable housing, and thus are at the forefront of the financial storm.
A Warning Ignored
Fiona Fletcher-Smith, chair of the G15 group of large London housing associations, revealed the extent of the crisis saying, "We had been warning the previous government about a cliff edge coming. We are tumbling down it now."The data is telling a grim story. Affordable housing starts in London plunged 88% in the year to March, from 26,386 to 3,156-the lowest since records began in 2015. Similar figures show that starts by local authorities and housing associations fell 75% in the year to June, the biggest drop since 1990.
The Ripple Effect: Rising Homelessness and Council Pressure This shortage has sparked an increase in the rate of homelessness. It saw the boroughs collectively spent £4 million a day on temporary accommodation for the homeless in the year to March-up by as much as 68 percent on the year before.
This crisis has also forced more people into the private rental sector, where rents have surged at a record rate. For poorer Londoners, the high cost of housing has made the city increasingly unaffordable, forcing many to move farther from job opportunities.
The Role of Building Safety Costs
Of course, one of the biggest factors for this decline is the burgeoning cost of the safety work required on high-rise buildings in the wake of the Grenfell fire. London is hit disproportionately because it contains a much larger than average number of high-rise homes.
Will Jeffwitz, head of policy at the National Housing Federation, said: "London is massively disproportionately affected by building safety costs because of the number of buildings and the cost of remediating them. Those two things combined are probably the biggest factors clobbering the finances of housing associations in London.
For example, it is estimated that hundreds of millions of pounds must be spent on the remediation of hundreds of tall buildings by the housing association L&Q. This puts additional stressors on its homebuilding abilities.
The National Trend
This crisis in London is reflected in the national picture. The supply of genuinely affordable housing-which encompasses shared ownership schemes and social rent properties-has been falling as a result of increasing construction costs and higher interest rates. Scandals over the state of existing social homes have also introduced tougher standards for providers, who are now diverting resources to maintenance rather than new construction.
A Call for Urgent Action
The collapse in the supply of affordable housing affects not only those who need homes but also the broader economic inequality. If left unaddressed, this crisis is likely to push even more Londoners into homelessness or out of the city altogether.
The problem requires a multiagency approach by policymakers, housing associations, and local authorities. Solutions need to attack root causes-building safety costs and rising interest rates-and support finances to make increases in housing starts happen.
This will take some time for recovery, but with an assured regular supply, London will have more hope of achieving social and economic stability.