Housing crisis threatens London's future business prospects

According to a report published today by the London Chamber of Commerce and Industry (LCCI), London’s housing crisis could seriously undermine the city’s economic competiveness and lead to problems for both employers and employees. The LCCI’s report argues that businesses relying on easy access to a skilled workforce could face staff retention and productivity problems if employees continue to be priced out of the London housing market and are forced to take longer commutes into work.

To overcome the capital’s chronic housing shortage, the LCCI suggests that more land should be secured for development and more builders with the capacity to deliver these homes should be available. Specifically, the LCCI recommends that all brownfield sites in London should be registered by the Mayor of London and private land owners would then be given four years to start building on such sites before a compulsory purchase would be enacted. Public sector landowners would have to start building within two years of being registered.

Public sector organisations are estimated to own as much as 40% of all brownfield land in London. Over 653 hectares are owned by the Greater London Authority, while a further 29.4 hectares are owned by the London Fire Brigade, 45.9 hectares by the London Legacy Development Corporation and 103.3 hectares by the Metropolitan Police Service. Other bodies like the NHS, local authorities and government departments also hold brownfield land in London, but do not publish this data. The LCCI suggests that ‘excess public sector land’ should be sold for development.

One controversial proposal in the LCCI’s report recommends that local authorities work with the Mayor of London to evaluate the potential to reclassify ‘a proportion of poor quality greenbelt land’ within the Greater London area for housing. The LCCI states that although any proposals to build on greenbelt land will ‘stir strong emotions amongst residents local to affected sites, the creation of truly “garden” suburbs in a handful of formerly private greenbelt areas could secure the delivery of the homes that London needs for generations to come’.

Over the last decade, London’s population has grown by around a million, faster than at any other time previously, to 8.4 million in 2013.  However, not enough new homes have been built to cope with this increase, with around 20,000 new homes a year being built in London over the last 10 years. To ensure that developers are producing the homes that the majority of Londoners need (those earning less than £50,000 and in the low to mid-housing price range), the LCCI suggests that the Mayor of London should set a new annual target for the creation of homes affordable to those earning up to £50,000.

LCCI’s survey of London businesses also found that 59% of employer respondents believed that increased housing costs have led to a greater pressure to increase wages for three in five employees. Rising housing costs have, according to the LCCI’s survey, also diminished businesses’ ability to recruit and retain skilled workers, with 42% of businesses stating that increased housing costs have had a negative impact on recruitment. One third (33%) of London firms surveyed believed that the lack of affordable housing in London affected punctuality and productivity. LCCI says that ‘employees that regularly endure travel fatigue are unlikely to be as productive and motivated as they could be, as long commutes have been found to make workers less happy and more anxious’.

Speaking about the LCCI’s proposals, LCCI’s Chief Executive, Colin Stanbridge, says, ‘There is no magic wand that can change this situation overnight but we urgently need to start building many more homes that ordinary Londoners can afford to buy or rent, otherwise we could find the workforce that is the capital’s greatest asset under threat’.