Millennium Mill

Why affordable homes are the real luxuries in the housing market

Only 6,000 affordable homes were built in London last year, less than a quarter than the number needed – and there is no political will to solve the crisis

Millennium Mill

The Millennium Mill at the Royal Docks in east London, part of a new Enterprise Zone

There’s always a reason: The greater good. The council coffers. That important public infrastructure project. That precious vote.

In this climate, the market will always win and affordable housing will always lose. Not wholesale. Not by decree. But slice by slice, development by development until the policy just bleeds out.

Jasmin Stone, from Newham, who marched on the matter in January, said: “It’s extremely unfair that young people cannot afford to stay in the city they love and grew up in.”

Unlike Jasmin the options open to the market are wide and varied.

In this high-stakes blink-off developers can persuade planners to ghetto-ise the social housing, divorce it from the high-rise money-maker in a way that contradicts the “cheek by jowl” aspiration of mixed housing. Or they can, under new rules, renegotiate the agreed levels if they threaten viability. Or they can knock on Mayor Boris Johnson’s door for a big hug.

Mayor Ken Livingstone pushed for 50% levels of affordable housing. Mayor Boris Johnson scrapped this target. Mr Johnson sees wealth creation and world city status as paramount, so he’s always ready to give a warm welcome to investors. The percentage levels can always be nudged downwards. Or rent levels considered affordable can always be nudged upwards.

Last week, the London Assembly debated the development of the Royal Docks. Major companies – the only kind that could tackle such huge swathes of brownfield land – are finally moving in decades after the docks closed down.

But the need to upgrade the entire area, beyond their own allotted pieces of land, is immense. The bill is significant.

To maintain appropriate levels of affordable housing a scheme has to be attractive. To make it attractive the surrounding area must also be raised up. If money comes from the developer, then the scheme is less viable and the affordable housing numbers must fall, according to the new correlation. If no work is done, the scheme is less attractive, the return falls, the number of affordable houses falls.

Greater London Authority Dan Bridge said: “The viability of all the key sites is challenging because of the infrastructure and that has an impact on the number of affordable homes we can deliver because that’s what gets squeezed.”

Bargaining chip

Affordable housing has become a bargaining chip rather than a line in the builders’ sand.

The developers have the public authorities over a barrel – but they are not always the bad guys.

The Government has recently changed the planning regulations to give developers a pass on affordable housing if they are turning empty properties into new homes. They will also be exempt from S106 community contribution payments.

Westminster Council told the Guardian, the loss of funds could be as much as £1billion. Even developers see this is “insane”. The Westminster Property Association said it would be “removing an important element of developer contribution to the provision of affordable housing”.

The Government’s aim is to turn derelict homes into viable ones. But what’s in frontline to take the hit? Profits? No, affordable housing. “That’s what gets squeezed.”

It is another signal that affordable housing has become the real luxury in luxury properties.

Bit by bit it goes. The Mayor says 600 affordable homes in the 3,500 property Battersea power station development is better than nothing. That a reported £2,800 a month in Camden is affordable.

The safeguards are being dismantled systematically in favour of the absent overseas investor and the property developer.

The result is people on the streets, carrying placards or packing boxes. Busy getting squeezed.

Giles BroadbentWhy affordable homes are the real luxuries in the housing market

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