Thursday, 15 September 2011

So we don't need to build more houses, do we?


Rents in London and the South East are climbing through the roof. Market rents in the City are already beyond the means of most working people and continue to climb:

The cost of renting a property in London has reached a record high, despite the continuing economic slowdown.

 According to research from tenant referencing service HomeLet, the average rental price in the capital went over the £1,200 barrier for the first time ever.

In August, tenants paid an average of £1,202 compared with £1,154 the previous month.

The figures show a 12.2 per cent month-on-month rise in rental prices, while average tenant salary in Greater London rose by just 2.4 per cent.

The South East needs more houses yet the sclerotic planning system, the stolid banks and the idiot government (local and national) conspire to make it ever harder an ever more expensive to develop and ever more difficult to rent.

At the same time rents in the social housing sector (council houses and housing association lets) average about £330 - little more that 25% of the market rent. The scale of subsidy this represents is astonishing and demonstrates the difficulties with getting an effective rental market in a city where over half the properties for rent are in the social sector and in receipt of a massive subsidy determined by the property rather than by the earnings of the person(s) living in the property.

These figures - and a similar picture will be played out across the south east and in cities such as Leeds, Manchester and Birmingham - represent a huge challenge. If we fail to realise that subsidy isn't the most efficient way to manage a housing market where a great deal of the tenure is rental, we will find ourselves with an escalating problem of homelessness, default and housing debt from unaffordable rents rather than unaffordable mortgage risk.

And yes we do need to make it a lot easier for developers to build houses - this needs a sensible discussion about how to protect the 'green belt' rather than the "build the houses in the grotty industrial bits where the poor people live" approach pioneered by the CPRE.


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