London homes could drive wider economy

The study, from the London School of Economics and Political Science, argues that without London’s contribution, neither the national pledge of 150,000 affordable homes during this parliament nor longer term housing objectives is achievable.

It says affordable housing investment in London will be used more intensively than elsewhere and will have greater impact on reducing the need for public money by alleviating social costs.

The G15 group of London-based housing associations commissioned the report. It claims investment in affordable housing in London helps to support the broader economy, creating spillover benefits for the rest of the country, and that London has a relatively greater need for subsidised housing than the rest of the country.

‘There is indisputable evidence that the wider UK economy benefits most when investment goes into the capital’s housing stock.’

London mayor Boris Johnson

It is says the case for investment in affordable housing in London is overwhelming given the current dip in house building.

The report focuses on three main criteria for allocating subsidy: housing need; the wider benefits of affordable housing to the health of the economy and the public purse; and the issue of housing numbers.

On all three criteria, LSE researchers said the case for investment in London is particularly strong.

Stephen Howlett, chief executive of housing association Peabody and outgoing chair of the G15, said: ‘The report clearly sets out the pressing need for affordable housing in London and the far-reaching social and economic benefits of investment. We want to work with government to find new ways of providing the homes London so badly needs.’

Referring to the government’s affordable rent programme, which will allow social landlords to set rents at up to 80 per cent of market level, he added: ‘To raise the necessary income to fund capital investment in new affordable housing we would have preferred a system that allows us to charge slightly higher rents for all our tenants, not the new system which leads to much higher rents for just our new tenants.’

Boris Johnson, mayor of London, said: ‘Not only does London have the greatest need for more affordable housing but there is also indisputable evidence that the wider UK economy benefits most when investment goes into the capital’s housing stock.

‘In addition, focusing on London has a greater impact on reducing welfare costs. Put together, these arguments make the most compelling case for the government to concentrate its housing programme where it will deliver the greatest returns for all.’

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