London rents would fall by £251 per month if Labour met its housebuilding targets
Typical rents in London could fall by up to £251 if Labour succeeded in meeting its housebuilding targets.
This is according to a new analysis by the Centre for British Progress (CBP) think tank, which looked at the effect of the government’s lagging housebuilding programme on rental costs in London.
The data shows that housing costs are the main driver of poverty in London, squeezing living standards as people cram into flats that have become smaller and more expensive over time.
Housebuilding across the UK has persistently fallen short of government’s targets, and nowhere is this shortfall more acute than in London, where the city’s housebuilding has fallen short by an amount greater than the entire population of Milton Keynes.
The Labour government is currently struggling to meet its ambitious target of building 1.5 million new homes over the course of this Parliament, and is set to fall short by hundreds of thousands of homes.
According to the CBP, if Labour simply recommitted to this goal and delivered against this target for the next five years, London’s housebuilding stock would increase by 2.3% every year.
This would result in a 9.7% drop in rents over a total of five years under this housebuilding regime, which would equate to the rent on a typical two-bedroom in inner London falling by £251, the think tank said.
In addition to lowering the price of rents, building more houses would alleviate the cost of housing benefits incurred by the government.
According to the analysis, the government currently subsidises housing for one in 14 people in London, through legacy housing benefits and universal credit, as well as through building and maintaining social housing.
In total, the country spends £37 billion on housing benefits, which is similar to what it spends on policing and prisons.
The CBP estimates that for every 1% the number of households increases by, house prices will increase by 2%, the same for a 1% rise in real incomes.
If housing stock increases by 1%, the think tank predicts that house prices will fall by 2%.
If current trends continue, and the government continues to fail to meet its housebuilding targets, the CBP predicts that real housing prices in London will increase by 2% per year above inflation, worsening the cost-of-living crisis for renters in the capital and across England as a whole.
“The Government is rightly focused on tackling the cost of living, but it would be hard-pressed to find a more powerful lever than housing,” the CBP said.
“Nothing else can make such a great difference, so quickly, to so many.”
