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How to Tackle the Housing Shortage in London

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Housing Shortage

How to Tackle the Housing Shortage in London

I've been reading about the London housing shortage for quite some time now. However,  it's not just London - there is a property shortage all over Britain.

“By 2022, it is expected that there will be a shortage of one million homes in Britain unless  new homes are added at a dramatic rate”. These startling findings were made by the Joseph Rowntree Foundation (JRF) at its London conference held in 2002.  TWELVE years on, now in 2014, the current supply of housing in London is still falling short of demand.

Between 2001 and 2011, there was a 70% increase in the number of families occupying shared houses. The ridiculously high property prices in the UK have already made it difficult for young families to buy homes.

The shortage is even worse in inner London where the total number of families occupying rented homes almost doubled between 2001 and 2011.

Thanks to an increase in the foreign demand and consumer confidence, London properties are expected to get costlier over the next 2 years. Mortgage lending is also expected to rise by 20% this year. This will further increase London's price-to-income ratio, which is already 40% higher than the national average.

Is the problem limited to London?

Certainly not. The entire country is facing a property shortage, and the shortage is probably going to stay for about 10 more years.

The housing bust, which started in the USA has been spreading across the world. The only countries that seem to have been immune to the property crash were the new emerging countries such as Bulgaria, Slovakia, and the Czech Republic where property prices still grew. The credit squeeze has already affected housing markets in the UK, Spain, Denmark, and Ireland.

London Plan Target Figures

The Greater London Authority (GLA) published the ‘Further Alterations to the London Plan’ in January 2014. While the document released in 2011 had set an annual target of 32,000 homes, the revised document estimates that 42,000 new homes will have to be built each year to meet the growing demand for housing.

The revised draft plan also shows an increase in annual housing demand in all boroughs of London except Newham. The report also predicts that by 2030, London will be the first European city to be home to a whopping 10 million people.

Solutions in other countries

The housing problem is present in all parts of the world and this is how they are taking care of it:

San Francisco, US:

The biggest problem that San Francisco faces at the moment is that the people who want to live in this city exceed those it can accommodate. The city wants to build or rehabilitate 30,000 homes by 2020. This means that San Francisco will have to add 5,000 new homes a year. Interestingly, in 2011 only 260 units were built in this city. San Francisco wants at least 33% of the new homes to cater to the lower-income group.


In Australia, the government wants to help the lower-income group by providing a budget subsidy.  If a $200 additional weekly subsidy is provided on 20,000 homes, the annual cost will reach $200 million. For people belonging to the lower and middle income strata, rent and mortgage payments are their biggest expenses. So by providing subsidy, the government can alleviate poverty significantly. In fact, it is better than offering higher welfare payments that are not always spent on items that will increase the standard of living.

Fixing the London Housing Problem

In order to fix London's housing problems the government will have to take realistic and bold measures. This requires strong political will and paradigm shifts in policy. This also requires implementing clear ideas that make a city a great place to live in. Thanks to higher birth rates, the population in London is increasing at a fast pace.

The Greater London Authority (GLA) estimates that the city will require more than 100,000 homes each year till 2021 to meet the growing demand. Everybody seems to agree that there is a need to build more homes in the capital.

The GLA has also proposed some contentious moves. The proposed 'build now pay later' policy is targeted at utilising surplus public land for building homes. This might support sustainable suburban development on land close to rail and underground stations. There are also analysts who argue that the remaining parts of the so-called green belt are not exactly green and hence homes should be built in these areas as well. Others believe in going vertical. By building upwards, London can avoid adding to its suburban sprawl. Perhaps the right solution is a combination of both.

One thing is for certain – to keep pace with the growing population we need to build now .. along with the supporting infrastructure, schools, hospitals, power and water utilities etc…..