London faces a £39.8 billion shortfall in funding for new homes

January 5, 2013 § Leave a comment

Flats

Local councils in London are facing an eye watering £39.8 billion shortfall in funding for new homes according to research published by organisation London Councils.

The Capital’s population reached 8.2 million people this year. Forecasters believe it will reach 9 million before the decade is over. To keep up with this demand London will need to build 36,000 homes a year. Between 2010/11 only 19,860 new homes were built. This lack of development is reflected in London’s house prices. London is one of two areas where house prices are still rising. The only other area is the South West.

It’s not only house prices. The average Londoner living in rented accommodation gives half their salary to their landlord. Affordable housing is also sparse, just over 5,000 new ‘affordable’ homes were built in the first half of last year. Councils sometimes ignore their affordable housing policy in an attempt to kick-start flagging developments.

These figures mean that by 2020 there will be a shortfall of 221,000 homes.

Unless steps are put in place to overcome this shortfall house prices will continue to rise. As a result first time buyers will become exceptional. An aspiration available to only the well off. Those living in rented accommodation will continue to do so without any hope of owning property.

Real poverty caused by extortionate rents will also become more common. A two child family living on benefits receives only £110 a week. A two bedroom rented property in Brixton costs an average of £364 per week, whilst in South Lambeth the price rockets to £601 per week. Neither of these are particularly glitzy locations. Whilst there are benefit contributions towards rent, £110 a week is next to nothing.

 

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