Centre for British Progress (CBP) research suggests if national housing targets are met rents will be slashed significantly for Londoners, reports Kumail Jaffer, Local Democracy Reporter
Meeting national housebuilding targets could reduce average rents in London by £251 per month, new research suggests.
The government has committed to building 1.5 million homes across the country between July 2024 and the next election, which is expected in 2029. This includes 88,000 homes a year in the capital.
However, ministers have admitted there is only a “slim chance” of reaching the former target, while Sir Sadiq Khan’s London Plan suggests that, under favourable conditions, only 55,800 homes can be constructed annually over the next decade.
But a new paper from the Centre for British Progress (CBP) suggests that, should the government get back on track, rents will be slashed significantly for Londoners, who currently spend over 40% of their pre-tax income on their living space.
The CBP theorise that expanding housing supply will directly lower prices through moving chains, where new-build homes free up older, cheaper units for people further down the income ladder.
Between 2000 and 2019, London’s population grew by 1,653,000 – but only enough housing was added for 1,387,000 people. Increased demand for housing has driven up prices.
As such, meeting national housebuilding targets would increase London’s housing stock by 2.3% annually, resulting in a 9.7% drop in rents over five years compared to what renters would pay otherwise.
For a typical two-bedroom flat in inner London, this represents a £251 monthly saving by the fifth year of meeting the target compared to the current levels of building, which have collapsed in the last decade due to high interest rates and construction costs reducing viability for developers.
Rob Blackie, who co-authored the report and is standing to be the Liberal Democrat candidate for the 2028 London mayoral race, told the Local Democracy Reporting Service (LDRS): “London’s rents are far too high, because our Mayors have failed to build enough homes for the last 25 years.
“The good news is that we can bring down rents by hundreds of pounds a month if we increase housebuilding.
“If elected, cutting rents will be my top priority”.
The authors found that living costs in London are rising so fast that, on current housebuilding trends, a typical income after paying rent will fall by 0.37% a year. Hitting the target would turn that into a rise of 1.15% a year.
David Lawrence, co-author of the report and co-founder of the Centre for British Progress, said: “The government is right to look for ways to give families breathing space. The biggest one is hiding in plain sight.
“We find that hitting the Government’s building targets would reduce rents in London by £251 a month for ordinary households.
“This is far more than any cost-of-living announcement in the budget.
“Building more homes would boost growth as workers can be near good jobs. It can also be done for free – by streamlining planning constraints, improving building safety regulations and empowering residents.”
The report also suggests that, even at lower levels of social housing, more new build homes would take pressure off cash-strapped councils to deal with homeless families.
If just 10% of the new homes were social housing, the CBP claim, the number of London households in temporary accommodation could fall by up to 59%, saving councils £435m a year.
How would these savings differ by borough?
By year five, even in the cheapest parts of London, renting a two-bedroom flat would cost £150 a month less.
| Borough | Saving by year five |
|---|---|
| Bexley | £163 |
| Havering | £165 |
| Sutton | £166 |
| Croydon | £168 |
| Hillingdon | £170 |
| Bromley | £176 |
| Redbridge | £180 |
| Harrow | £183 |
| Barking and Dagenham | £184 |
| Waltham Forest | £184 |
| Kingston upon Thames | £188 |
| Enfield | £189 |
| Lewisham | £191 |
| Barnet | £199 |
| Greenwich | £207 |
| Brent | £207 |
| Hounslow | £208 |
| Newham | £213 |
| Merton | £217 |
| Ealing | £217 |
| Haringey | £218 |
| Richmond upon Thames | £238 |
| Southwark | £251 |
| Lambeth | £251 |
| Tower Hamlets | £259 |
| Wandsworth | £263 |
| Hackney | £266 |
| Hammersmith and Fulham | £280 |
| Camden | £280 |
| Islington | £288 |
| Westminster | £354 |
| Kensington and Chelsea | £367 |
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