Generation Rent has slammed a Labour housing policy review claiming that its proposals will force renters to be “exploited in perpetuity” to the benefit of homeowners.
The Lyons Housing Review, commissioned by the Labour party and conducted by Sir Michael Lyons, was released last week and sets out a “roadmap” of solutions to what it describes as the “biggest housing crisis in a generation”.
However, concerns have risen over the report’s solutions for local people who are denied access to accommodation in the face of foreign investors. Generation Rent, a campaign group for private renters, argued that the proposals are designed to benefit homeowners and property developers.
The report proposes that first-time buyers and local people should have first refusal on homes built in their vicinity for up to two months, which would allow them to enter in a contract with the developer before a third party does.
Many believe that two months is an insufficient amount of time for local buyers to purchase proposed new build properties, especially since residents may be wary of purchasing real estate before it physically exists.
Therefore new properties will be likely to attract foreign developers, especially from China and Singapore, who will then market them abroad as investments progressively raising house prices and rent values beyond the means of local people.
An example is the contentious Convoys Wharf development in Deptford by Hong Kong conglomerate Hutchinson Whampoa, in which only 14 per cent of the 3,500 proposed homes will be classified as “affordable accommodation”.
Alexander Hilton from Generation Rent said that Lyons’ proposed expansion of support for first time buyers and locals “sounds great but gives far more benefit to landowners than it does to local buyers”.
“As a renter,” said Hilton, “this [report] represents a political willingness for me and for people like me to be exploited in perpetuity to the benefit of homeowners, landowners and property developers”.
The Lyons Review highlighted the issue saying: “It is important that local people feel they will be able to access the new homes built in their areas. This is particularly a concern in some parts of London where there is a fear that local people will lose out to investor landlords and foreign investors”.
For Shnooks Seddon, a member of campaign group Hackney Digs, this is more than a fear: “I rent in Hackney and my flat is owned by someone who lives in Hong Kong, so it’s an investment for them. My rent is going up very fast and I’m about to lose my flat. I can’t afford to live in Hackney where I’ve lived for a long time.”
“It’s just wrong,” she continued, “that they [investors] are making huge profits while we suffer and lose our homes… and rich people move into all these fancy London blocks”.
Conversely property laws in Singapore prevent foreign buyers from renting out “restricted residential property”.
The Lyons report also urges the building of “at least 243,000 homes a year in order to keep up with the number of new households being formed,” after only 109,000 homes were built in 2013. It also proposes to speed up and simplify planning permission finding that 130,000 homes with planning permission were either on hold, or had been in the system for over four years.
Recognising that pressure is “particularly acute” for new homes in London and the South-East, the report debunks Boris Johnson’s London Plan for not meeting the capital’s critical housing needs.
Others have attacked the review’s lack of commitment to affordable housing. David Orr, chief executive of the National Housing Federation said: “I welcome the ideas that would see us build 200,000 new homes by 2020 and the ambition to go beyond this to meet demand. However the majority of homes are beyond the means of most first-time buyers. In London you now need an income of £100,000 to afford a mortgage. We can only make these new homes genuinely available for local people if we also make them more affordable.”
The scope of proposed new house building has also been contested by Generation Rent, who said: “It’s inconceivable why the report targets the building of only 200,000 new homes per year by 2020, with the implication that it will be less before then.
“We have been advocating an outright departure from the concept of housing as an investment and a move to housing as a utility. We submitted to Lyons our proposal for a second, cost-price housing market where people can buy a cheap home, but they can’t sell it for a profit or rent it out at market rates. Our proposal was also fully privately funded – and yet there was no sign that it had even been considered.”
Croydon, Hackney and Lewisham councils welcomed the report which proposes that all local councils create and enforce local plans setting out future house building in their areas.
Steve Bullock, Mayor of Lewisham and executive member for housing told ELL: “I welcome the Lyons report which sets out a very clear indication of how we can dramatically increase the number of new homes built. The detailed ‘roadmap’ spelling out what the new government will need to do is particularly helpful and Lewisham Council will be ready to play its part in delivering the ambitious programme.
“Importantly the report recognises the special circumstances that London faces and does not try to force a ‘one size fits all’ solution on us”.
Alison Butler, Croydon’s council member for homes and regeneration said: “We welcome the contents of the Lyons Report, particularly in placing local authorities as drivers of growth. In Croydon we are already embracing some of the findings: support for council-led partnerships to provide new homes and support for local housing companies. We are also backing shared ownership once again, as a good way of helping people without large incomes access housing ownership.”
Philip Glanville, Hackney’s cabinet member for housing said: “The Lyons Report is a positive first step in tackling the housing crisis. We welcome the potential opportunity to see local HRA caps lifted where councils present a business case and have a clear plan to deliver new homes. Hackney is committed to building new homes across all housing tenures, and has a proven track record of delivery.”
However, there has been disapproval over the report’s failure to allow local councils greater budgets to fulfil their housing needs. Bullock said: “The only disappointment is that the report does not recommend lifting the cap on council borrowing to build new homes. Councils like Lewisham are building again but we could do much more if the cap was lifted.”
Glenville said he believed Hackney could do even more in terms of house building with “greater financial freedom”.
Croydon, Hackney and Lewisham already have plans to build 14,348; 15,988; and 13,847 homes respectively by 2025, although concerns have risen as to the percentage of affordable housing within these targets.
Cited as the first major review into UK housing since 2003, the Lyons report names an “artificial scarcity of land for housing” and a “drastic” reduction in the nation’s capacity to build homes as the key causes of the country’s housing crisis. It repeatedly calls for strong political leadership from Labour to make housing a “national priority”.