Build Up, Build Out, Build Differently: Solving London’s Housing Crisis

Carter Jonas proposes a 'radical and bold' three-pronged approach...

If the three main parties can agree on anything, it’s the reality that we face an unprecedented housing crisis in London. As the capital’s population has rocketed, housing delivery has been going in the other direction, opening up a chasm that will now require the building of at least 50,000 homes per year to fill. Factor in the demand backlog and that figure could be closer to 62,000.

To put that in context, we’ve averaged less than 16,000 a year since 1980…

It’s all very well promising to “build more” – as all the manifestos do to varying degrees – but rhetoric is of little use when faced with the reality of accommodating another three million people by 2050 – in a city where the average-priced house already costs over 12 times the average salary.

“Radical and bold action” is what we need now, says Carter Jonas in a new report called “Solving London’s Housing Crisis”, which sets out a three-pronged approach to inject some practicality into proceedings.

The three strategies, namely ‘build up’, ‘build out’ and ‘build differently’, won’t work in isolation, says the firm, but deployed in tandem could be our best shot at unlocking the estimated 1.5 million homes required by mid-century.

Here’s a summary of each:

Build Up

Potential new home supply: 897,000

  • Will not be appropriate everywhere and raises a number of issues for London’s status as a World City with some of the finest historic buildings and monuments that are globally recognisable and need appropriate protection.
  • Tall residential buildings can offer their own sense of lifestyle and community, as well as proximity to transport, shopping and other amenities.
  • Iconic status of many tall buildings can also be a valuable marketing tool for projecting status.
  • Proportion of residential supply approved through tall building developments has more than doubled from 16% to 42% between 2004 and 2015. This represents 30% of all new residential developments approved for that period, or 150,000 new homes.
  • The average height of London’s residential ‘tall’ buildings developed over the last decade has been around 30 storeys, although the buildings range from 20 to 75 storeys.
  • New London Architecture (NLA) research identifies 436 tall buildings in the capital which are currently at various stages of the planning process, with approximately three quarters of these being residential.
  • Around 90 (20%) of these tall buildings are currently under construction and permitted to deliver more than 21,000 residential units. If all the residential schemes go ahead, they could add over 76,000 residential units in London.
  • The focus of this development is primarily in the central and eastern parts of London, which makes up three-quarters of all tall building proposals.
  • A key to delivery is the combination of Housing Zones, Opportunity Areas and Intensification Areas. These areas cover 25,000 hectares, or 15% of London, and have a minimum delivery target of approximately 360,000 residential units. The majority of this – approximately 306,000 residential units – comes from the 38 Opportunity Areas. Cumulatively, these areas are expected to deliver over a third of the one million new homes target by 2036 in the London Plan. However, analysis of data for the Housing Zones, Opportunity Areas and Intensification Areas indicates a notional residential density rate of just 16 dwellings per hectare (ranging from 8 in the North to 26 in the West). This suggests that there is considerable scope to increase density levels at many of these locations. This should include more tall buildings as part of the residential mix, leaving scope for greater intensification in these locations, perhaps supporting over 720,000 homes or double the 360,000 new homes currently forecast.
  • In addition, more tall building development around transport hubs, such as the proposed Crossrail 2 and the Bakerloo Line Extension, would significantly boost supply. This approach is already promoted in the London Housing Supplementary Planning Guidance. If station locations outside the Housing Zones, Opportunity Areas and Intensification Areas are considered, then supply could be further boosted by over a 100,000 homes. We estimate that there is at present some 5,048 hectares of designated Strategic Industrial Location (SIL) and Locally Significant Industrial Sites (LSIS) land in the capital, of which around  350 hectares is not being fully utilised. This could provide further significant opportunity for residential development.
  • The critical point though is whether London is ready for this. Can the capital city move from being the ‘city of a thousand villages’ to the ‘city of a thousand skyscrapers’? While this approach would certainly increase overall housing numbers, it only addresses a proportion of the housing need, both in terms of affordability and housing type. It also raises issues in terms of protected ‘strategic views’ across the capital.
  • Another set of issues are more delivery related. This includes the capacity and expertise to deliver this scale of tall building programme, which could be 100 tall buildings a year over 30 years. There are also workforce and building materials constraints to solve. Overall, we think there is potential to double the supply across the Housing Zones and Opportunity and Intensification Areas to 720,000 from the 360,000 target by greater use of tall residential buildings, as well as a further 100,000 from greater development around new transport hubs. This is still someway short of the 1.5 million homes needed, which is where the ‘building out’ solution is needed.

Build Out

Potential new home supply: 250,000

  • Requires a re-examination of the Green Belt and ‘protected’ land in and around London.
  • The Green Belt has been largely untouched since it was formally introduced in 1955. Yet the formal role set for the Green Belt in national guidance is at odds with its original intention. The defined role of the Green Belt, reinforced by the current NPPF and the Housing White Paper, is primarily to act as a barrier to London’s expansion. However, the original purpose of the Green Belt, as envisaged by Ebenezer Howard, the London County Council and others, was as a reserve supply of public open spaces and recreational areas around the edge of London, which would be accessible to Londoners. In practice, though, over three quarters of London’s Green Belt is not generally accessible to the public.
  • The scale of the Green Belt within London’s boundaries is significant, and even more so outside the Capital. Over a fifth of the land area in Greater London is designated Green Belt, comparable to the total amount of built land in London. A further 40% of the land area of London is made up of other green space – gardens, parks, water and so forth. In overall terms, London is identified as the greenest ‘global city’ of its size, with New York having 20% green space, Paris 9%, Tokyo 4% and Shanghai just 3%.
  • About a quarter of the Green Belt in London is either environmentally protected land, park or public access land. The great majority, meanwhile, is in ‘other uses’. Public access to these areas is restricted, limiting the amenity benefit to the wider public. Analysis by London First has indicated that approximately 15,300 hectares of ‘non-green’ Green Belt is within two kilometres of an existing rail or tube station. Assuming a third of this transport accessible ‘non-green’ land was developed for housing, then we estimate it could support at least 250,000 new homes. While this development option would provide a wider range of residential types and at a more affordable level than the ‘build-up’ approach, there would be major policy hurdles to overcome. Nevertheless, a coordinated strategic review of the Green Belt and Metropolitan Open Land led by the Mayor is needed to meet London’s housing needs. This, of course, is politically very challenging, but so is solving London’s housing crisis.

Build Differently

Potential new home supply: 397,500

  • Requires better use of technology and systems, improvements in planning and policy, and modifications to the housing market.
  • Concept covers a wide range of measures, such as industry and market developments like modularisation, funding support and certainty, and continued commercial to residential conversions.
  • Also policy developments such as intensification and re-use of public assets, and enabling higher-quality smaller unit developments.
  • Modularisation, sometimes referred to as off-site construction or pre-fabrication, is still emerging. Major residential developers such as Berkeley Group are adopting this approach in Greenwich and elsewhere in London, and are planning to open their own factory. Legal & General Homes already has a pre-fabrication factory in Yorkshire. This improves delivery speed, so it can in theory boost supply rates.
  • This is important but, by itself, it will not increase overall supply, and will only accelerate the delivery of what is already planned. This is where other measures can help, but these are not easily categorised, other than by the catch-all term of ‘more innovative and flexible means of delivery’.
  • This for instance includes the potential arising from the now permanent commercial office to residential conversion policy. Whilst controversial, this policy has been delivering new homes, although with potential longer term risks to the commercial sector in some areas. Since 2013 more than 20,300 new homes have been approved in London using this mechanism, from almost 9 million sq ft of office space. Some 3,713 of these were ‘converted’ and delivered in 2015 and 2016. Arguably, these may have been the ‘easy-win’ conversions. Outer London offices may offer more potential, but even allowing for this there may only be in the order of 15-25,000 additional homes from commercial floorspace conversions.
  • There may be benefits, if suitably managed, in allowing a proportion of residential schemes to develop more compact but high-quality residential units, along the lines of those promoted by Pocket Living. This could be orientated towards a particular segment of the market to avoid inappropriate matching of supply and demand. If, for example, 10% of the 360,000 residential units planned across the Housing Zones, Opportunity Areas and Intensification Areas were developed as smaller high quality units, then this could allow between 11,500-37,500 extra units to be delivered.
  • Another option proposed is building new homes on the safeguarded land along the River Thames. The development restriction on these sites comes up for review in 2018, and it has been suggested that these areas could provide up to 25,000 new homes. This level of delivery is based on higher density developments, including tall building schemes, often in very sought after waterside locations.
  • And finally we note that, the Policy Exchange has identified 21,000 hectares of public land in London, some of which may overlap with the land identified by London First as non-Green Belt near a transport hub. However, they estimate this could generate approximately 310,000 homes.

Download the full report via carterjonas.co.uk