Happy Cost of Rent Day Londoners – for the rest of the year your money is yours
With the average London tenant needing to work 146 days a year just to pay off their rent, today marks a miserable milestone, writes Sebastian Charleton
This year, London’s Cost of Rent Day falls on Tuesday, 27th May. This means that the average London tenant will have worked for a staggering 146 days just to pay their annual rent. From today, they start earning for themselves.
It’s a pretty miserable milestone but it exposes the scale of the capital’s housing crisis. London is the nadir of nimbyism, remarkable even by UK standards. Whether it’s a row of townhouses or a block of flats, getting anything built is a Sisyphean task. As a result, your average London renter works three weeks longer than the national average just to keep a roof over their heads.
London is only getting worse for renters
Sadly, the situation is only getting worse. Despite its status as the beating heart of the British economy, London is building fewer, not more, homes. Seven in 10 boroughs haven’t even started building a single new home this year – and this comes as development in other regions is finally picking up pace.
As the Centre for Policy Studies has pointed out, part of the problem stems from the Building Safety Act 2022 – a well-intentioned but ultimately flawed response to the Grenfell tragedy. Under the new rules, any building over seven storeys or with more than one residential unit must receive approval from the Building Safety Regulator. Yet the regulator is currently signing off on just 14 per cent of applications. This bureaucratic inertia is particularly damaging in the capital where, thanks to high density, developers must expand upwards rather than outwards.
Whilst the capital clearly has a number of structural issues that exacerbate the rental crisis, it would be a mistake to let local politicians off the hook. Successive administrations have pandered to nimbyism, opposing everything from Heathrow expansion to affordable housing.
Like his predecessor, newly-knighted Mayor Sadiq Khan spent much of his time in City Hall resisting development, claiming in 2016 that the green belt was “sacred”. Rather than supporting supply-side sensibility, Khan has repeatedly asked for powers to impose rent controls, blaming individual landlords for a decades-long failure to build new homes.
How to move the dial
But the Overton window is starting to shift. Khan now seems to recognise that a lack of supply is driving sky-high rents. In fact, he’s committed to build 25,000 affordable homes in 2024-25 and has recently pledged his support for development on the green belt.
Still, unlocking development in London is no easy task. Despite £4bn in central government funding, the number of affordable homes built in the capital has fallen by 66 per cent over the past two years.
Until we get full-fat planning reform, London needs bespoke policies to slash rental costs. Bringing back Urban Development Corporations, state-backed corporations responsible for transforming the derelict London Docklands into Canary Wharf, could be transformative. By bypassing existing regulation and attracting private money, a Thames Gateway UDC could unlock 163,000 new homes. That’s over 10 per cent of Labour’s 1.5m national target.
What’s more, removing restrictions on land within a 10 minutes’ walk of a railway station would allow the development of 1m more homes within the green belt surrounding London alone.
Without the threat of re-election hanging over his head, Sir Sadiq Khan has the opportunity to make real change, working with a friendly government to implement imaginative solutions to the housing crisis. By getting spades in the ground, Khan could secure his legacy and drive down rents for everyday Londoners.
Sebastian Charleton is digital and communications manager at the Adam Smith Institute