This week, Nimby Watch is in for a reckoning…
Hey, you. Excuse me? Are you talking to me?
Yes, you. I’ve got something you should read. Hang on a minute, shouldn’t you be asking me questions? Are you breaking the format?
Damn right I am. Every fortnight, you take me somewhere in the UK, show off the excesses of Nimbys there, and insist the UK has a major housing shortage. And we have a great time doing so.
Yes, but, look at this in the Telegraph. It’s headlined ‘Third of new London homes deemed unsellable’, and goes on to note that ‘developers offloaded 34% of properties to investment funds and housing associations last year’. Yeah, that seems plausible to me. I could believe those numbers.
You’re taking this very calmly. Why wouldn’t I? What do you think these numbers are telling you?
You’re a fraud! The Nimbys were right all along! There’s so little demand for new homes in London that even the ones we’re building aren’t selling! How can there be a housing shortage if developers are having to offload homes in bulk and at a discount? Okay, I’ll acknowledge it does look weird. But there’s a lot going on here. It does seem that if London has a housing shortage, people should be snapping up new homes as soon as they appear – and that’s not happening.
But that doesn’t mean we don’t need them. New homes tend to sell at a premium, which means they’re even more expensive than the existing stock. In London, they’re almost always leasehold flats, which make people nervous – there are a lot of horror stories about service fees and similar traps. But the bigger factor at the moment is timing.
Why would timing be a problem? A shortage is a shortage. If it hasn’t been sorted, the demand should still be there, right? Starting a new building project in London takes years. Planning is absolutely brutal and usually requires several rounds of appeals before success. That means that the developer has to sit on the land, earning no return, for years – which adds to their costs.
But it also means the world changes while you wait. In this case, mortgage rates have gone up – limiting what regular buyers can afford. The cost of building has climbed markedly over that time, too. On top of that, Help to Buy – which offered extra help in London – expired a few years ago, too. Everything has moved in the wrong direction for builders. They’re left either trying to sell fast and at least unlock some cash, or risk sitting on unsold properties for months or years.
But if the housing crisis is as bad as you say, shouldn’t desperate buyers be having to snap them up anyway? Yes and no. Thanks to a policy change from the Labour Government, there are more of what we used to call entry-level properties on the market than usual. The introduction of the Renters’ Rights Act, coupled with changes on how buy-to-let income is taxed, has meant a lot of amateur landlords are selling up and exiting the market. That means London has an awful lot of ex-rental flats on the market at the moment – exactly the kind of relatively basic one-bed and two-bed flats that developers have been trying to shift.
Sounds like a win-win for everyone who isn’t a developer. Renters are getting to buy their first home, landlords are getting screwed, Nimbys are getting vindicated. Roll the end credits! Well, depending how long they owned their properties, landlords are getting to lock in their gains. But a change in properties from the rental sector to the owner-occupier one isn’t good for a housing shortage.
A rented two-bedroom flat will probably have both rooms rented out – maybe to two single adults, but often to two couples. Once it’s sold to someone who intends to live there, that rarely happens. Owned homes are less densely occupied, leaving more people changing fewer remaining properties. If you can’t afford to buy right now, you might find it even harder to get a rental flat than it used to be. Property prices could fall for buyers, but rents could still go up. Given renters tend to be poorer than buyers, that’s incredibly unfair.
It sounds like you’re saying that there’s still a shortage, even if there’s a bit of a temporary dip in sale prices. Yes, we’re very much not in the territory of problem solved here. Instead, we’ve managed a very British situation in which it’s almost impossible for anyone on an average (or even good) income to buy in London without family help, but it’s also almost impossible to build new homes properly either.
That doesn’t sound…great, to be honest. It really doesn’t! Still, we’re about to have our seventh prime minister in a decade. Maybe this one will be the one who knows how to fix it.
This week, Nimby Watch is in Danson Park, Bexley, in South East London. But why? I see we’re in a park! You never bring me anywhere nice. It’s a particularly nice park, too! Danson Park, which celebrated its 100th birthday last year, has a lake – which hosts boating and water sports activities – football […]
This week, Nimby Watch is in Winstanley, in the historical county of Lancashire. But, like certain other people in Winstanley right now, we’ve got our eyes on Westminster… Okay then, why are we in Winstanley. Where exactly is Winstanley, anyway? Well, if you’re part of the southern Westminster elite, you might say that Winstanley is […]
This week, Nimby Watch is in south-east London, just for a change… Alright then, where have you brought me this week? We’re in rapidly-gentrifying Peckham, in south-east London. Specifically, we’re by the Aylesham Centre, a shopping centre that has clearly seen better days, and they definitely weren’t recent. Hang on a second, haven’t we been […]
