Lord Cryer
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Ruth Cadbury
My hon. Friend is absolutely right; I will move on to that subject shortly. Certainly a salary of more than £90,000 is not the average mid-point for a teacher or social worker.
Time and again when I talk to employers, housing is the issue. For some nurses there has been some key worker housing, which was introduced to deal with market failure and to provide cheap housing, but that is all but disappearing. Those entering nursing will also face a mountain of student debt now that the Government have announced the scrapping of the NHS bursaries. The Royal College of Nursing survey recently showed that many nurses will leave London if they cannot afford anywhere to live, which will add to the problems in the NHS.
At the lower end of the pay scales are people who are essential for London to work. A daycare assistant is paid £6.70 an hour to work in a nursery here in London; that is about £1,000 a month. No one with a family can do such work when the average rent is around £1,500 a month. Even renting a room takes well over half the daycare assistant’s take-home pay. I have a specific example of a hard-working man and his family in my constituency. Since coming to London he has worked full time in two jobs. He has rented privately for years, taking multiple loans to cover deposits and rent up front, and is now in considerable debt as a result. His landlord has now raised the rent as it is the end of the tenancy, so he now cannot stay there with his family. Letting agents and private landlords will not accept claimants of housing benefit, which he needs to top up his rent, and he cannot borrow any more money for a deposit. Despite never missing a rent payment and despite two previous letting agents confirming that with good references, he cannot rent privately. He has had to apply to the council as homeless in order to get housing.
But my constituent will not get a council home. The current series of “How to Get a Council House” is filmed in my borough of Hounslow. None of the families in that series has ended up getting a council home. If they have been lucky and got through the hoops, and if they have been accepted under the council’s duty to house, they are placed in temporary accommodation, as my constituent and his family will be. Temporary accommodation is private rented housing where housing benefit may contribute to housing costs, but even then my constituent is not out of the cycle of escalating rents. He may dream of owning a home—a Government objective—but what he needs is a home at a rent he can afford on his low wages.
He is not alone. The ending of a private tenancy now accounts for 39% of homelessness acceptances in London. According to the Department for Communities and Local Government statistics, 32,000 people in London made an application to their council as homeless in 2014-15, which represents an increase of 38% over five years. DCLG statistics reveal that right-to-buy sales between October and December 2015 accounted for 26% of sales. Right to buy is for people who are already fortunate to be council tenants, but, with a Government discount of up to £100,000, it is taking valuable stock away from local authorities, hence their dependence on temporary accommodation.
In the council housing sector, like-for-like replacement is not happening for the council homes bought under right to buy. The new replacement homes that the Government announced could be shared ownership or low cost sale rather than rent. At least 36% of all homes sold by councils across London are now let by private landlords, many of them subsidised by housing benefit because the rents are so high. The sale of high value vacant council homes will have the overall effect of restricting the number of affordable houses for rent. London Councils is concerned that the objective to replace two homes for every one sold may not be sufficient to cover construction costs and land purchases in the right mix of housing. So already we have examples of the failure of the housing market in London that is causing the affordability crisis.
I have not yet mentioned employees in the private sector on middle incomes. Fuller’s Brewery in my constituency is a thriving business with an international reputation. Having spoken to the directors, it has become evident that the housing crisis is affecting their business and their ability to recruit and retain staff. So who can truly afford to buy a home in the area they want to live in, grew up in or want to work in?
John Cryer (Leyton and Wanstead) (Lab)
Leyton, which forms the bulk of my constituency, has traditionally been a relatively cheap place to buy, compared with the rest of London, but in recent years all the surveys—for example, by the Evening Standard and other newspapers—point to Leyton as one of the city’s property hotspots, which has meant that property prices and rents have gone through the roof. Does not that point to the fundamental problem: a lack of supply? The imbalance between demand and supply has reached the point where so many people, such as those whom my hon. Friend is discussing, can no longer afford to rent or buy in London.
Ruth Cadbury
My hon. Friend is absolutely right. So many people are moving away. Many are moving abroad to countries where their skills are valued and they have a much higher standard of living. Even a childcare assistant can earn £40,000 in the United Arab Emirates. It is, though, investors from middle east countries who are propping up London’s housing crisis. Many people are moving elsewhere in the UK as well, thus adding to London’s brain drain and skills drain.
Yesterday’s Evening Standard reported that young Londoners spend almost 60% of their salaries on rent. The first year group to leave university with more than £50,000 of debt, because they were the first group of students to have to pay £9,000 a year in tuition fees—my son among them—are now hitting the jobs market. How can someone save, pay off their student debt and afford to eat and keep warm with rents at current levels?
Ms Buck
My hon. Friend is absolutely correct. The result of all the different pressures together, with worse to come, has an impact beyond housing, strictly defined; it is changing the face of London, intensifying housing inequality, and changing the face of poverty and low incomes in London. The typical family in poverty is now, for the first time in modern times, a working family living in the private rented sector in outer London—that takes me back to the point that the hon. Member for Enfield, Southgate (Mr Burrowes) raised. Poverty is being suburbanised and intensified by what is happening in the private rented sector.
All that is bad for London’s economy. There is ample testimony from London First, the CBI and many other organisations that the housing crisis is making it hard to recruit, and is undermining the effectiveness of London’s economy. It is making it hard to recruit and retain staff in the services on which we all depend. However, it is also undermining London’s civic life—the health and wellbeing of the city—as people struggle to cope with the consequences of the housing crisis. Above all, it is bad for individuals—for struggling families and for young people seeking to find a stable home of their own in which to build a life and family.
Inner London is on the front line, because it has the steepest house prices, broadly speaking. How are inner London boroughs such as Westminster coping with that? Very badly indeed, I am sorry to say. Westminster produced just 46 new affordable homes last year. Over the past three years a mere 12% of all the development in Westminster has been affordable. That is less than half of the already appalling 28% London-wide average. That is the pattern across London. Areas with the greatest housing pressures have the worst supply of new affordable homes.
In the weeks before the London mayoralty election—it is no accident or coincidence—a number of new developments were pushed ahead for approval by Westminster City Council. The Whiteleys scheme in Bayswater has 103 luxury flats, just 2% of which are affordable. Paddington Green has 690 flats, 19% of which are affordable. There are other schemes in the pipeline. Westminster City Council is closing and demolishing the Jubilee sports centre—the Prime Place development—and the developer is marketing its properties in the far east before a single one has been built. In fact, it was marketing in the far east before the closure of the sports centre. Figures out this week show that there has been a 9% rise in the number of London properties owned by offshore companies. It is not simply that we are failing to build—although we are—but we are building the wrong properties, in a way that is part of a process of purchasing from overseas by the super-rich.
Developers are private companies and will behave as the Government permit them to do, and as they are driven to do by commercial logic, unless they are encouraged to do something different. They have been going into the luxury housing market. I was struck yesterday by the marketing brochure of the Galliard company:
“In order to keep up with the trend of trophy apartments and to give buyers what they want, developers are creating properties that offer nothing but luxury and indulgence. In fact, Kay & Co have released statistics that show that ‘35% of units under construction or completed in 2014 are in 5* developments.’”
It adds that according to
“Knight Frank’s Global Development Report from 2015, the amount of prime luxury properties…in London”
is up threefold since 2009. So we are building luxury properties, in some of which—such as the Vauxhall Tower—hardly anyone lives. We are building luxury properties that are a sponge for global money and the super-rich; and a not insignificant proportion of that money is dirty money.
John Cryer
Is my hon. Friend aware that in many new developments in central London, the flats—because overwhelmingly they are flats—are not even being advertised in Britain? I do not mean that in a nationalistic sense, but they are being advertised only in areas of the world where there are large concentrations of wealth and power. Does she think we are storing up an awful lot of social and economic problems for future years, if the trend continues?