The London housing market – leading us to a smaller society

Exactly how much truth was there in my recent claim that the UK’s housing market (and London’s in particular) make shared ownership of social problems less likely, as excessive house prices interact with incoming caps on housing benefit, leading to further segregation between rich and poor? I suggested that the growing gap between owner-occupiers and everyone else, combined with existing incentives for affluent people to move to affluent areas, would make this aspect of the “Big Society” agenda ever harder to achieve, as communities become less heterogenous and social deprivation is cordoned off and intensified.

A recent report by the Pro-Housing Alliance campaign group, the Housing Crisis in London, states that within 5 years most inner London boroughs will be almost entirely unaffordable to benefit-reliant households. Those boroughs that remain affordable, already characterised by multiple deprivation and high unemployment, will house ever increasing numbers of poor and vulnerable households, thus increasing “the segregation of poor and better-off households within London.”

A shortage of social homes will exacerbate the issue. The current target to create 30,000 new social rented homes in London during 2008-12 is likely to be missed: the net increase between 2008-10 was 10,000. In any case, the target if met would only address around 50% of the real needs identified in assessments by the Greater London Authority. Meanwhile, so-called “affordable housing”, typically defined as 80% (or below) of market rent and requiring a household income of £44,500, is in reality only affordable to the top third of London households (the median London household income is £30,000 on equivalent measures). Meanwhile 80,000 London homes remain empty, with insufficient incentives and efforts to bring them back into use.

The most obvious effect of our dysfunctional housing market, in which unaffordable housing is the norm, is the large number of people in over-crowded and unhealthy housing (25% of households in 9 inner London boroughs), filtering down to an increase in street homelessness (8% during 2010/11). Besides its severe negative impact on physical and mental health, overcrowding at home also affects school standards, with children slipping into anti-social behaviour and falling behind in their studies.

The numerous adverse effects of poor housing have been conservatively quantified and costed in a variety of separate studies. Putting the studies together, the report estimates the annual cost of poor housing at upwards of £5bn to the NHS and other public agencies: enough to pay the annual interest on borrowings in the order of £100bn. This sum would put all existing housing in good order and provide enough funding to solve current supply problems by meeting real housing need in the long-term.

The reports can be downloaded from the Pro-Housing Alliance website.


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