An estate agent has warned that planning permission will cap London’s efforts to provide new homes at just two-thirds of official targets if approvals continue at the current rate.
London’s planning system is allowing new homes at an annualised rate of just 27,470 as of Q4 2014 – or just over two thirds (69%) the political target for 40,000 finished new homes each year – an objective announced by George Osborne and Boris Johnson in February and underlined in March’s Budget.
According to new research from specialist London estate agents Stirling Ackroyd, analysis of planning applications across all of the capital’s 32 boroughs plus the City of London shows just 6,780 homes were given planning permission last quarter, spread across 826 different sites. These approvals represent 80% of all potential homes receiving a planning decision in Q4 2014. This is out of plans for 8,632 possible homes in Q4. By contrast, if 100% had been approved, this could have allowed an annualised rate of up to 34,530 new homes, or 86% of the official target rate.
In reality the number of homes reaching completion stage currently stands at an annualised rate of just 18,440 – after Q4 saw just 4,610 properties finished in the space of three months.
Despite this low base, London has seen an acceleration in finished homes. Last quarter’s figure represents a 30% increase from the previous quarter (Q3 2014). This is almost twice the acceleration in home completions seen outside the capital – across the rest of England there was a 17% uptick.
However, new home starts were far lower last quarter, at just 3,040 – or an annualised rate of just 12,160 homes per year. If this pace of housing starts continues and is reflected in the annual rate of completed homes it would mean failing to reach even one-third of the government’s annual target.
Andrew Bridges, managing director of Stirling Ackroyd, said: “For culture, opportunities and sheer scale London now rivals any global megacity. But our capital must not become a victim of its own success – which means homes for everyone who can contribute to this city’s vibrant future. Homes have proved an excellent investment over previous decades, and today’s new Londoners demand the same opportunity. Planning must keep up.”
Out of all London’s boroughs, Tower Hamlets gave permission for the greatest number of new homes in the final quarter of 2014. Paving the way for 1,197 dwellings spread over 25 different sites, this means more than one in six homes receiving planning permission in the capital was in Tower Hamlets, or 17% of the quarterly total.
Second to Tower Hamlets in absolute terms was Croydon, where 682 homes came through the planning system, followed by Richmond with 591 dwellings approved in the quarter.
At the other end of the scale Lewisham allowed just 11 new homes in Q4 2014 out of a potential 18, while Kensington & Chelsea approved 13 out of 16 possible new homes and Lambeth only 17 homes out of a total of 40.
This is excepting the City of London where in three months only one new residential property was approved.
Comparing the number of homes given permission to the total number of potential dwellings applied for via planning applications, boroughs vary by the leniency or rigour with which they have interpreted their guidelines.
Greenwich and Hammersmith & Fulham take joint first place by this measure, with both boroughs allowing 97% of potential dwellings in Q4 2014. Newham and Ealing also lead the rest of London, in joint second place approving 96% of potential homes.
By contrast, Southwark stands out at the bottom of the league table, rejecting 87% of possible homes in the quarter. The remaining 13% represents just 58 homes out of 448 that were applied for in Southwark.
Bridges said: “Areas with the most new homes in the pipeline, such as Tower Hamlets, might feel able to reject other projects that might not fit the area. That could be a luxury of success. However, others might be missing out on similar levels of growth on current trends. Southwark is home to the densest area of new build potential according to our own research – but is currently rejecting the greatest proportion of homes.
“In the property market, London’s centre of gravity is shifting from traditionally fashionable areas to relatively affordable boroughs. Most of west and central London is now too expensive to even be an aspiration for the average younger buyer – while a burgeoning demand for homes to rent is following the same trend eastwards and into less well-explored corners of the capital. Yet for many people looking for a home, fashion is a distant second place to affordability. There are plenty of reasonably priced homes on the market, but still not enough in the right areas.”
In London’s nine Conservative-controlled borough councils, 82% of homes were given planning permission in the last quarter of 2014. Close behind, the capital’s 20 Labour Party-controlled boroughs approved 78% of homes.
Meanwhile in the two Liberal Democrat councils just under three quarters (74%) of potential homes were allowed, while in boroughs without any overall control only 64% of homes received the go-ahead.
Bridges added: “Homes are an emotive topic, and a lack of them will be the most electrifying political issue of this decade. Politicians everywhere should take heed – but most of all in London. The comparative weakness of boroughs without any overall control is one sign we need more decisive action. An overall plan for London needs cross-party agreement, and must be put into practice at a local level by every Borough Council. We need hundreds of thousands of extra homes – and that will take political courage.
“Most vitally, London needs more developers submitting imaginative proposals in the first place. Local government, the London Assembly and the national government have a responsibility to encourage new building and seize the housing dilemma by the horns. There’s plenty of space and more than enough demand – so realistic, costed and scaleable policies can provide the homes demanded by millions of people.”
